Dollar Trades Strong, Yields Surge As Stock Market Plunges

Azeez Mustapha

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US stocks were previously hit by a sharp sell-off on the back of soaring Treasury yields, and the sell-off continued into daytime trading. At the time of this posting, although Treasury yields are slightly down today, stocks remain in the red. US futures are pointing to a recovery, but there is little confidence the recovery can continue until the close.

After rising throughout the week, US bond yields pulled back sharply on Friday, as bond purchases rose towards the close of trading in the US. Selling is most noticeable at the long end of the US Treasury curve, which has flattened sharply; 30-year bonds are down nearly 19bp today. the day to just above 2.10%.

Investors digest comments from central bank officials on real long-term rate hikes and inflation. In particular, the ECB spokesman noted that increased policy incentives may be required if yields could prematurely deprive effective support. The chief economist at the Bank of England also warned that uncontrolled inflation now poses a greater risk.

Despite Friday’s plunge, bond yields appear to end the week a decent amount higher than they started; The 10-year bond yields are up about 6 basis points from Monday’s opening levels of about 1.36%, and the 10-year TIPS yields are up about 7 basis points from just below -0.8% this week’s opening.
US Dollar Index (DXY) Confronts Upside Barrier
The index reverses Thursday’s losses and climbs well above 90.00 on the back of a strong rebound in the US 10-year benchmark.

The move in 10 years Treasury yields to levels last seen about a year ago resulted in a strong return of the index from below 90.00 levels on Thursday and allowed the index to move to multi-day peaks in the 90.75 / 80 area. Friday.

In the register, US inflation, measured by headline PCE and Core PCE metrics, rose 0.3% MoM in January and 1.5% YoY. According to additional data, the outstripping trade deficit, projected at $ 83.74 billion last month, while personal income increased 10.0% MoM in the first month of the year, and personal spending increased 2.4% compared to the previous month.

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.

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