I was on Bloomberg's Daybreak: Americas today. The issue at hand was about the dollar's losses since the start of the year. I suggest that the correction actually began a day or so after the Federal Reserve hiked rates in mid-December. I noted that the correction was not just about the dollar but also interest rates.
I suggest that interest rates are still key. The US 10-year yield may have bottomed yesterday near 2.30%. The US premium over Germany on 10-year money reached an extreme of almost 338 bp the day after the Fed hiked. That was the largest premium since 1997. The US two-year premium reached almost 2.00% at the end of last year, as year-end scramble pushed the German two-year yield toward record lows. That was the largest premium since 2000. The premium that US over Germany narrowed in recent weeks, but is finding support. I suspect that the dollar's downside correction is over or nearly so.
Click here for the video link.
Disclaimer
Cool Video: Bloomberg's Daybreak---Dollar Correction
Reviewed by Marc Chandler
on
January 18, 2017
Rating:
Reviewed by Marc Chandler
on
January 18, 2017
Rating:
