Why Bond Yields Have Surged
US bond markets continued to reel, ending with minor losses last week. Bond yields remained close to their recent highs. The bipartisan agreement that ended the US government shutdown could…
The US Dollar Index regained stability last week and broke the six-week losing streak. The US Dollar Index started this week on a stronger note.
Since the onset of the current euphoric rise in stock prices after the US elections, the bond markets have remained somewhat muted.
On Monday, the US Dollar Index opened the day lower and traded with mixed sentiment below opening prices in the early hours.
The US bond market’s (BND) troubles escalated last week as inflation expectations continued to rise.
The US Dollar Index started this week on a stronger note. At 4:00 AM EST on February 2, the US Dollar Index was trading at 88.81—a gain of 0.16%.
According to the latest communication from the Fed, the pace of the balance sheet unwinding program has been increased to $20 billion per month.
The first FOMC meeting in 2018 ended on January 31, 2018. At this meeting, the Fed’s target interest rate range was left unchanged at 1.25%–1.50%.
Long-term yields (TLT) have not appreciated to the same extent as short-term yields, in response to interest rate hikes and changes to the dot-plot.
On Wednesday, the US Dollar Index opened the day lower and traded with weakness at fresh three-year low price levels in the early hours.
The euro-dollar (FXE) exchange rate surged past its three-year peak and tested 1.25 during the eventful week that ended on January 26, 2018.
The US bond (BND) market remained largely unchanged in the week ended January 26, 2018, which was filled with surprises.
The US Dollar index (UUP) saw a lot of volatility in the week ended January 26, 2018. There were many reasons for the decline in the US dollar.
On January 24, 2018, the US Dollar Index opened the day lower and traded at fresh three-year low price levels in the early hours.
The US Dollar Index regained strength on January 23. At 5:35 AM EST on January 23, the US Dollar Index was trading at 90.45—a gain of 0.06%.
The latest US government shutdown only lasted for three days and is unlikely to have a major impact on the US economy.
On Monday, January 22, both Republicans and Democrats agreed to a short-term funding bill that would expire on February 8.
The US Treasury is not able to issue any more debt until the debt ceiling is raised, which could increase the volatility in the bond markets.
The most recent US government shutdown occurred during President Obama’s tenure in 2013. After the 16-day shutdown, the S&P 500 Index had posted gains of 3.0% for that period.
The US Dollar Index opened lower on Monday. At 4:55 AM EST on January 22, the US Dollar Index was trading at 90.50—a drop of 0.08%.