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Why Global Markets Regained Strength on July 5

PART:
1 2 3 4
Part 3
Why Global Markets Regained Strength on July 5 PART 3 OF 4

US Dollar Index and Treasury Yields Were Stable Early on July 5

US Dollar Index

After pulling back last week, the US Dollar Index started this week on a stable note. The US Dollar Index was stable on July 4 amid quiet trading due to the US Independence Day holiday. In the early hours on July 5, the US Dollar Index was stable above 96 and marching towards resistance of 96.5.

US Dollar Index and Treasury Yields Were Stable Early on July 5

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Upbeat economic data released on Monday helped the US Dollar Index stage a recovery. According to data released by the ISM (Institute for Supply Management), the United States ISM manufacturing PMI (purchasing managers’ index) was 57.8 in June—higher than the market’s forecast of 55.2 and the highest reading since November 2014. The decreased global risk appetite and increased demand for safe havens amid North Korea test launching an intercontinental ballistic missile also supported the US Dollar Index.

The market looked forward to the FOMC’s meeting minutes from June’s meeting. The minutes were released at 2:00 PM EST on July 5. At 5:30 AM EST on July 5, the US Dollar Index was trading at 96.35—a gain of 0.14%.

US Treasury yields

US Treasury yields rose at the beginning of the week amid improved sentiment in US markets. Treasury yields lost strength in the past two weeks amid increased concerns about the chances of one more interest rate hike in 2017. However, the rise in US manufacturing activity to a 34-month high improved the outlook for US markets in 2H17 and decreased interest rate hike concerns.

At 6:10 AM EST on June 26:

  • The ten-year Treasury yield was trading at 2.348—a gain of ~0.09%
  • The 30-year Treasury yield was trading at 2.868—a gain of ~0.2%
  • The five-year Treasury yield was trading at 1.418—unchanged
  • The two-year Treasury yield was trading at 1.933—a gain of ~0.17%

The iShares 20+ Year Treasury Bond ETF (TLT) fell 0.32%. The ProShares UltraPro Short 20+ Year Treasury ETF (TTT) and the ProShares UltraShort 20+ Year Treasury ETF (TBT) rose 1.6% and 1.1%, respectively, on July 3.

In the next part, we’ll discuss how commodities performed in the early hours on July 5.

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