There is a fairly pervasive view at the moment that the bond market is ranging and that we have to wait for a change in economic data to break the paradigm. Given that, it’s not a big surprise that a 5-8 bps drop in Treasury yields today hasn’t moved the dollar but it’s still a notable sign.
The US dollar had its worst H1 in 50 years but has rebounded modestly so far to start the second half. Some of that was underpinned by a steady climb in yields as 10s rose to 4.42% from 4.22% but that’s reversed 7.7 bps today and the dollar is basically flat. I wouldn’t draw any big conclusions about a further dollar bounce based on one day of price action (with not much else going on in markets) but it’s something to keep an eye on.
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