⚖️💵 Dollar Uninspired By Yield Differentials: Cable FX Macro
- Rosbel Durán
- Mar 14, 2023
- 1 min read
We have seen massive volatility in sovereign debt markets, we recently noted Treasury 2-year notes posting a two-sigma day as yields fell by 50 basis points
By end of Monday session, the front-end had dropped more than 60 basis points, this was the largest one day decline since the early 1980s
This comes on the back of market expectations for a Fed pause, while some desks are calling for rate cuts in March. Analysts at Nomura see a 25bps rate cut next week, Natwest and Goldman Sachs expect the Fed to pause rate hikes
When it comes to the dollar, the Cable FX Macro Dollar index stood relatively unreactive to the sharp drop in rate spreads. Our own measure of front-end USD yield spreads to G10 peers recorded its largest decline on record. Despite the move in rates and the Fed repricing, the <.RDDXY> is steady on Tuesday as it pares some of the losses from Monday, last up 0.4%
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