The U.S. Dollar Index Spot slipped below 98 points for the first time in over three years on Monday, while the 10-year Treasury yields were steady around 4.35%. Experts describe this divergence as the measure of stress in markets.”
What Happened: The U.S. Dollar Index slipped 1.20% to 98.211 during the publication of this article. However, its day range stood between 97.921 — 99.208 on Monday, according to the TradingView data.
Historical data shows that the dollar index last slipped below the 98 point mark to 97.79 as of March 30, 2022, closing. Whereas, the 10-year Treasury bond yielded 4.35%.
Jim Bianco, the president and founder of Bianco Research LLC., highlighted this divergence in an X post and called it a “measure of stress in markets.”
“Higher rates are not supporting the dollar right now. This means they might have to go a lot higher to stop the dollar from falling,” he added.
The relationship between higher yields and higher dollar value exists because the dollar value generally appreciates when foreign investors buy U.S. dollar-denominated instruments, especially the risk-free Treasury bonds. However, this divergence, as shared by Bianco in the given chart, raises concerns.
1/2The breaking of this relationship is …Full story available on Benzinga.com
