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US Dollar Is Weaker, Treasury Yields Rise in the Early Hours

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US dollar

After falling for three consecutive trading weeks, the US dollar regained strength on Monday and had a positive start this week. However, it looks weak in the early hours on May 2. The sentiment in the US dollar has been weaker amid weaker-than-expected economic data.

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Weak economic data

Weakness in the US dollar started amid President Trump’s comments that the dollar was too strong. The dollar also weakened after the new tax cut plan was announced by Trump’s Administration. Downward momentum remains high amid weak US 1Q17 GDP data released last week. The US dollar was stable on May 1, but its lost strength after weaker manufacturing PMI data for April. The market’s focus shifted to the Fed’s two-day interest rate meeting that ends on May 3.

At 6:30 AM EST on May 2, the US Dollar Index was trading at 99.05—a fall of ~0.03%.

Treasury yields

Treasury yields rose to three-week high levels on Monday and traded stable in the early hours on May 2. US Treasury debt prices fell on May 1 amid comments from Treasury Secretary Steven Mnuchin about introducing ultra-long bonds into the market. The ultra-long bonds have a maturity of more than 30 years. Treasury yields that move opposite to debt prices rose. The market expects the Fed to keep the interest rate unchanged amid weaker economic data. Recently, the Fed increased interest rates in March—the second time in three months.

At 6:30 AM EST on May 2:

  • The ten-year Treasury yield was trading at 2.34—a rise of ~0.39%.
  • The 30-year Treasury yield was trading at 3.03—a rise of ~0.21%.
  • The five-year Treasury yield was trading at 1.86—a rise of ~0.62%.
  • The two-year Treasury yield was trading at 1.29—a rise of ~0.61%.

The iShares 20+ Year Treasury Bond ETF (TLT) fell 0.83%, while the ProShares UltraPro Short 20+ Year Treasury ETF (TTT) and the ProShares UltraShort 20+ Year Treasury ETF (TBT) rose 2.3% and 1.6%, respectively, on May 1.

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