Dollar falls as Treasury yields retreat
FILE PHOTO: U.S. dollar banknotes are displayed in this illustration taken, February 14, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
Monday saw a decline in the value of the US dollar relative to a basket of currencies as traders awaited new U.S. economic data that was expected later this week and as U.S. Treasury rates pulled back from the 5% mark they had earlier in the session.
The yield on the benchmark 10-year U.S. Treasury note fell on Monday following a brief increase above 5.0%, marking the milestone from July 2007 that it tried to reach again last week and raising the possibility of an economic slowdown due to increased borrowing costs.
Traders are on watch for several events this week, including a European Central Bank meeting, and the release of U.S. GDP data and the Federal Reserve’s preferred inflation gauge.
“A big week of data with eyes on U.S. GDP on Thursday, plus BoC (Bank of Canada) and ECB (European Central Bank) in the mix, and of course geopolitical risk remaining incredibly elevated is really denting traders’ desire to do much as the week gets underway,” said Michael Brown, market analyst at Trader X in London.
But the main news on Monday was the yield on 10-year U.S. Treasuries reaching as high as 5.021%, the latest stage of a relentless sell-off in government bond markets, driven by investors accepting central banks will keep rates persistently high, particularly in the United States, an increase in supply of bonds and widening term premia.
The 10-year yield was last at 4.8375%.