Rising USD Despite Plenty of Money. Whats Next?



Global stock markets took a small step up at the opening of markets on Monday. However, overall we can speak of a very mixed sentiment. The complex market picture we have seen in previous weeks is still in place after the start of the US economic aid package.

Longerterm US government bond yields continued their climb, taking the 10year above 1.625, a 13 month high. The 30year bond yield rose to 2.38, which it was steadily above before August 2019.

Rising US bond yields are putting the trends of previous weeks back on the agenda. Investors also ask for higher bond yields in other regions and sectors, which is reflected in many market dynamics.

Although the rise in yields is a consequence of the selloff in the debt markets, this does not hinder the dollar. On the contrary, it is gaining on bond pressure. One can see how the dollar index has turned upwards since the end of February, reflecting the debt markets trends.

Rising yields tighten financial conditions and undermine the basis for economic recovery. That is why central banks in several countries have stepped up their efforts to curb rising yields. More and more, the markets eyes are now on the Fed Will it agree this week to announce more measures to curb rising yields?

This type of rising dollar hits emerging market currencies the hardest, although the dollar index added more than 20 in the year following its turn to growth in 2014.

Simultaneously, a sharply growing dollar with a weak economy undermines…

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