US02Y : The BOND dilemma The recent dot plot is quite interesting. It has 2 important notes:
a) no recession
b) you got to wait longer if you are looking for cuts.
This caused yield to move UP - to price in a longer Fed pause.
And I think both short and long yield to continue to be HIGH.
In a situation with high DEBT load, a higher rate environment is trouble.
$ FX and US yield sometimes move in unison and sometime not. We just need to know when it does and when it choose not to.
We are now again at the point when things tilt. I THINK that when yield goes any higher, DXY would need to move LOWER to compensate for the higher rates. As we know, DXY is now facing some resistance on its way UP.
In a week or two, US might face another possible government shutdown. We must trade with caution.
Till the next dot plot in 12/2023, DXY might NOT move up as fast as earlier thought.
Good luck.