A Fundamental Shift in the US Yield Curve

Global Markets Bonds and Interest Rates
1

Hi all,

Note, this post is for the experienced trader with an understanding of fixed income and intermarket analysis. I wanted to highlight that it’s the first time this year that DXY is depreciating during a flattening of the curve, represented by a blue rectangle (yellow rectangles show the flattening of the curve not altering USD value)

See the picture via tradingview

It implies a slowdown in US capital inflows, and the curve being a more accurate reflection of a decrease in demand for credit and growing signs that higher supply of capital via more savings is underway. If this trend continues, we should expect the flattening of the curve to potentially act as a more accurate indicator of the future direction of the US economy and the USD.

I’ll be happy to provide further insights and what the ramifications are when trading the US Dollar. You just need to ask.

2 Likes
2

Great stuff here Sir! May I know why you are using 3mo for measure of the flattening of the curve? most of the time in the news/reports theyre comparing 10s with 2s or 30s with 5s. Thank you :slight_smile:

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Hey Martha,

That’s based on the Federal Reserve Bank of San Francisco after a new research published late Aug.

It’s an insightful read:

Thanks!

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Got it Many thanks sir