⚖️🔺Dollar Not Following Short-Term Yields Lower: Cable FX Macro

• We have previously discussed the degree to which rate spreads continue to influence the dollar as market narratives change. Our own measures of the dollar and U.S. 2-year yield spreads have decoupled since March and the gap is extending as dollar yields move lower relative to its G10 peers

• The Cable FX Macro Dollar Index has retreated from its YTD peak, it is now trading around 3% lower relative to its levels at the beginning of March. USD remains positive for the year despite the sharp decline in yields, our Cable FX Macro USD Spreads Index fell to post the worst month since March 2020

• While rate differentials and the broad dollar are decoupled, we found that the long-term relationship between risk and the USD remains solid