US bond yields rising strongly but the dollar isn’t following

A break in US 10 yields into 2.60%, for the first time since last March, is having no effect on the dollar. We’ve hit a high of 2.613% and sit just under the 2017 double top around 2.63%.

US 10 year yield 4hour chart

US 10 year yield 4hour chart

The dollar, and in particular USDJPY, isn’t budging an inch, which is highlighting the disconnect we’ve been seeing between bonds and the dollar very recently. Last week we had all that action regarding the China story on cutting US bond buys, which was later refuted but the latest US TIC data showed a drop in bond holdings for both the two big holders, China and Japan, in Nov. Bond selling has been the theme so far this year in what looks to be a big investor asset switch. With central banks (mostly) well on the road to normality (wherever that new level may be), money sitting in the safety of bonds is looking for higher risk. Could this finally be the time when the widow maker trade (bond shorts) pays off?

 

Ryan Littlestone

Psychedelic chartist extraordinaire. Have your shades ready.
Philosophy: “Don’t be a Dick for a tick”

Read how Ryan got into trading here
Ryan Littlestone

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