Schedule, USD / EUROPEATS եւ US 10-year treasury harvest
A strange thing is happening in the USA.
As investors complain about hats because of fear Tariff Fuel Financial CrisisA rare split has opened between the dollar and income, which the American government pays its debts.
Meanwhile, to some extent technical, this means that Green back sinks At the same time, as US loan costs are rising.
This trend already has panic investors that say that the two main financial measurements usually do the opposite in the tandem.
It’s worse, the stock markets have also been tucked, as Donald Trump’s trading war unleashed a wave of economic turmoil.
In Barclays, Christian Keller mentions how far the United States has fallen, as Trump spread his trading war at the beginning of this month.
“Parallel sales of shares, interest rates and currency are typical of developing markets, but not the main secure markets for the world,” he said.
Investors were used to the idea that the United States was the best place for their money in good times or bad, giving America the “Excessive Privilege” to control the world’s backup currency.
This meant lower loan costs and easily access the floods of foreign money, in the states, to enrich the country and increased faster.
But suddenly investors travel their back on the United States, the dollar and other assets are blown away.
It represents a shocking reversal of the usual forms of the behavior, breaking what he would see as the main rule of global finance.
The result is that the yield of dollar and bonds, which and adults tend to move to the tandem, have sharply deviated.
Even after the president suspended various tariffs from almost all of his countries in China, the markets could not meet.
From April 2, which Trump has been called “Liberation Day”, the dollar has decreased more than 4 pieces, and the profit of the 10-year US bonds rose from 4.2 to 4.2.
Keller says steps are a remarkable break of history.
“The devaluation of the dollar in response to the increase in the US tariff.
As tariffs damage imports, textbook economics dictated that the dollar strengthens. Similarly, the expectations of the decline should prompt interest rates, including bond yields.
“US treasury concessions have increased as a result of foreign owners, demanding concerns about the higher term premiums of treasures as a secure guardian tool,” says Keller.
Gerard Leons, Netwealth’s economist, notes that in the last 25 years America has partially popular than the lack of alternatives.
For example, the replacement of the German Deutsche Mark was eliminated to one safe haven, while Japan is no longer viewed, as it was once the voice market.
He was also removed from several proposals for bonds in recent years.
Quantitative relief (QE)which the purchase of the Federal Reserve was driving at the peak of almost 9 trillion (6.9 trillion), longing since the Central Bank goes down its balance.
When the policy was after the financial crisis, the Central Bank’s actions, the new CE channels will fall the dollar at the same time when causing stabbing returns.
US stock dominance also affected the performance of the dollar as the so-called Superb seven technology companies They forgave cash in the USA. But it was also shocked by a trading war.
Meanwhile, the American trade deficit comes from the United States and the households buying goods from abroad.
At present, more than one-fifth trillion debt of 36 US government is funded by foreign buyers.
If Trump manages to break the US trade deficit, he will cut the flow of the dollar, which will find their way to the American bond market.
Shortly, there are borders that the authorities can take to restore the belief of the US economy.
For example, in the Federal Reserve, Jerome Powell could buy bonds in the markets.
But it is difficult for him to shoot QE once again once again fearing that it can repurchase inflation next to tariffs.
Moreover, the Fed cannot limit the effect of Trump to limit the impact of Trump, says Chrushna Guan Ethrak Izu, who described the recent sale of “almost unprecedented.”
“Fed, Fed, can restrict the prices of prices,” he said. “But that cannot stop capital outflows due to the loss of trust in US economic policy.”
After all, the status of the reserve currency, which gives America such authority in the world, is based on trust. And once, this trust is questioned, it risks to become an independent prophecy.
Holger Schmading in Beneniberg Bank warns about “Liz Trump’s moment” In America, citing the former prime minister, whose mini budget has caused the market chaos.
“Unusual politics, a gambler of public finance and the prospects of its growth, can cause bond investors, assuming that government debt is risky,” he said.
“The turbulence between the US Treasury Yerkitis and the dollar is concerned about investors’ concerns about Donald Trump’s policy agenda.”
“Damage to the trading war can speed up the deterioration of the US fiscal position.
“The huge uncertainty will lead to a delay in investment and consumption, a sharp decline in the US economy.”
He predicts that he later falls into the dollar and increasing profitability, the more shocking deviations that the most important economic indicators for deteriorating.
“These developments are so important to watch, as they mention the potential paradigm shift how the United States is seen as a destination of capital flows.”
“This is initiated not only with extreme tariff policy, but also associated with the concepts of the rest of the world to provide the dollar as a reserve currency.
“Because the tariff and foreign policy proposals arise more and more, these ideas also began to be more remote. This, in turn, requires the rest of the world to review the US as an investment destination. “
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