Why the US Dollar Index and Treasury Yields Pulled Back


Sep. 22 2017, Updated 8:18 a.m. ET

US Dollar Index

The US Dollar Index regained strength last week and started this week on a stable note. The dollar rose after the FOMC’s statement was released on Wednesday. However, the dollar pulled back on Thursday amid profit-booking and started Friday on a weaker note.

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Market sentiment

The market sentiment on the US dollar was strong at the beginning of this week amid high expectations of a hawkish tone by the Fed in Wednesday’s FOMC statement. The US dollar rose to two-week high levels as the Fed signaled one more interest rate hike by end of this year. The Fed also announced its plan to reduce its $4.5 trillion balance sheet. Profit-booking at elevated levels made the dollar pull back on Thursday. In the early hours on Friday, the sentiment is weak amid reports about a warning from North Korea. The country mentioned a possible hydrogen bomb test in the Pacific Ocean. On the other hand, the market is looking forward to the release of the US manufacturing, services, and composite purchasing managers’ index reading today.

At 6:20 AM EST on September 22, the US Dollar Index was trading at 91.89—a fall of 0.4%.

US Treasury yields

After starting this week on a stronger note, US Treasury yields moved higher in the first three trading days of this week and lost momentum on Thursday. With dented sentiment, Treasury yields started Friday on a weaker note and traded with weakness in the early hours. The decreased risk appetite amid fresh North Korea tensions weighed on Treasury yields in the early hours.

Movement in Treasury yields 

 The movement in Treasury yields at 6:25 AM EST on September 22 was:

  • The ten-year Treasury yield was trading at 2.250—a fall of ~1.2%.
  • The 30-year Treasury yield was trading at 2.780—a fall of ~0.99%.
  • The five-year Treasury yield was trading at 1.860—a fall of ~1.4%.
  • The two-year Treasury yield was trading at 1.431—a fall of ~0.83%.

The iShares 20+ Year Treasury Bond ETF (TLT) fell 0.06%. The ProShares UltraPro Short 20+ Year Treasury ETF (TTT) and the ProShares UltraShort 20+ Year Treasury ETF (TBT) rose 0.16% and 0.11%, respectively, on September 21.

In the next part, we’ll discuss how commodities performed in the early hours on September 22.


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