The dollar is linked to the treasury revenues collapsing

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The close relationship between the revenues of US government bonds and the dollar collapsed with investor investments on American assets in response to the volatile policy of President Donald Trump.

Government borrowing costs and currency value tend to move together in recent years, with increased returns that usually indicate a strong economy and attract foreign capital flows.

But since the “liberation day” in Trump Definitions It was announced in early April, the return increased for 10 years from 4.16 percent to 4.42 percent, while the dollar fell by 4.7 percent against the currency basket. This month, the relationship between the two decreased to its lowest level in nearly three years.

“Under the normal circumstances,” Shehab Gallo, head of the G10 FX strategy at UBS.

But “if the returns are rising because the US debt is more dangerous, due to financial concerns and uncertainty in politics, at the same time, the dollar can weaken,” which is a pattern “that was seen frequently in emerging markets.”

The “big and beautiful” tax bill for the president, along with the last MOOOY cut Among the credit rating of the United States, the sustainability of the deficit brought a more intense concentration for investors and the weight of bond prices.

Torsten Släk, chief economist in APOLLO, suggested that the US government’s credit swap differences – which reflect the cost of protecting the loan from backwardness – are trading at similar levels of Greece and Italy.

Trump’s attacks on Federal Reserve Chairman Jay Powell have terrified the market. President Powell summoned to the White House this week and told the central banker that he was Make a mistake Not to reduce interest rates.

“The power of the US dollar comes partially from its institutional safety: the rule of law, the independence of banking services and the predictive central policy. These are the components that create the dollar as a backup currency,” said Michael de Bass, the global head of the prices traded at Citadel Securities.

“The past three months have necessitated the question of a question,” he said, adding that “a great concern for the markets at the present time is whether we cut the institutional credibility of the dollar.”

The difference between the treasury yield and dollar It represents a noticeable transformation of the pattern of recent years, when expectations about monetary policy and economic growth have been decisive engines of government borrowing costs.

Andreas Quinig, president of FX International in Amundi, said the new style may increase the risk of investors looking for Haven’s assets.

“This changes everything,” he said. “When the dollar is a budget factor, you have a stable wallet. If the dollar suddenly is linked to the dollar, it increases the risks.”

Goldman Sachs analysts wrote in a Friday note that investors were asking whether there was a basic shift in the asset classes.

They wrote: “It is the latest fears.

“The last phenomenon of the dollar has remained in addition to the higher returns and low stock prices,” Goldman analysts added.

The weakest of the American currency is partly due to the holders of the rooted assets in dollars, which are increasingly looking to hedge from these investments, and takes a short position in dollars in this process.

“The more uncertainty in the policy, the greater the possibility that investors will raise their hedge rates,” said Galeno from UBS.

He added: “If the hedging rates on the current shares of the origins of the dollar increases, then you are talking about many billions of dollars from the sale (the US dollar).”

Goldman analysts suggested that investors should be for the weakness of the dollar, especially against the euro, the yen and the Swiss franc, all of them have risen in recent months. “These new risks create a strong basis for some specialization for gold,” they added.

Additional reports from Louis Ashworth