Ian Smith and Harriet Clarfelt of the Financial Times report that falling US bond yields are weakening the dollar as investors expect more Fed rate cuts amid slow growth and rising inflation, partly driven by Trump’s tariffs. The dollar is down 1.9% this year, with concerns over economic stability growing. They write:
A fall in US bond yields is piling pressure on the dollar, as investors bet that slowing economic growth will push the Federal Reserve to keep cutting interest rates despite persistent inflation.
The 10-year Treasury yield fell to 4.32 per cent on Tuesday, the lowest level since mid-December. The decline from above 4.8 per cent last month has been prompted by a worsened outlook for US growth, after a string of data showed weak consumer and business sentiment.
That has hit the dollar, which is now down 1.9 per cent this year against a basket of its peers, confounding expectations that Donald Trump’s return to the White House would continue to bolster the currency. […]
Nominal US Treasury yields have also fallen sharply since their peak in mid-January. […]
UBS analysts said earlier this month that falling real yields, while inflation expectations remained high, reflected a “stagflationary impulse” from tariffs.
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