Cool Video: Bloomberg’s Daybreak – Dollar Correction

Summary:
Marc Chandler - Click to enlarge 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.

Topics:
Marc Chandler considers the following as important: Cool Video, EUR, Featured, FX Trends, newsletter, USD

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