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US Dollar and Treasury Yields React to Italy’s New Government

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US Dollar Index

The US Dollar Index surged to six-month high price levels on Tuesday. However, the index pulled back in the next two trading days amid the weak market sentiment. The US Dollar Index opened slightly higher on Friday and was trading with mixed sentiment in the early hours.

Market sentiment

Decreased concerns about Italian politics took the shine out of safe-haven assets and weighed on the US Dollar Index on Thursday. In the early hours on Friday, the rise in US Treasury yields is supporting the US Dollar Index. Decreased uncertainty about Italy’s political conditions gave Treasury yields room to recover. The US Dollar Index didn’t respond to the Trump Administration’s plans to impose import tariffs on Europe, Canada, and Mexico. The market is looking forward to the release of May’s non-farm payrolls and unemployment data. The data are scheduled to be released at 8:30 AM EST today.

At 5:45 AM EST on June 1, the US Dollar Index was trading at 94.05—a gain of 0.05%.

US Treasury yields

After moving higher for two days, US Treasury yields rallied in the early hours on Friday. The improved political scenario in Italy amid the coalition by populist parties to form a new government and avoid the early elections pushed US Treasury yields higher on Friday.

Below are the movements in Treasury yields as of 5:55 AM EST on June 1.

  • The ten-year Treasury yield was trading at 2.882—a gain of ~2.1%.
  • The 30-year Treasury yield was trading at 3.045—a gain of ~2.0%.
  • The five-year Treasury yield was trading at 2.716—a gain of ~1.9%.
  • The two-year Treasury yield was trading at 2.435—a gain of ~1.00%.

The iShares 20+ Year Treasury Bond (TLT) declined 0.16%, while the ProShares UltraShort 20+ Year Treasury (TBT) and the ProShares UltraPro Short 20+ Year Treasury (TTT) gained 0.41% and 0.52%, respectively, on Thursday.

Next, we’ll discuss how commodities performed in the early hours on June 1.

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