Bessent's Bond Market Intervention Sends Shockwaves Through Currency Markets
US Treasury Secretary Bessent's surprise intervention in the US Treasury market has sent shockwaves through global currency markets, leading to a broad-based sell-off of the US dollar. The Treasury Secretary announced that he would double the size of Treasury buy-backs to $4.0 billion from $2.0 billion, with the aim of slowing the rise in US borrowing costs. As a result, the 30-year Treasury yield plummeted by nearly 14 basis points.
The move had a ripple effect on currency markets, with the Canadian dollar (USDCAD) soaring due to broad-based US dollar selling pressure. The pair opened at 1.3766 and traded in an overnight range of 1.3761-1.3813 before closing at 1.3811.
In other markets, the US dollar index (DXY) fell to 98.71, while the euro (EURUSD) rallied to a high of 1.1711 after Bessent's intervention. The single currency was also boosted by German producer price data, which showed a significant increase in prices.
In contrast, equity markets in Asia were mixed, with some gains and losses offsetting each other. However, European markets were more subdued, with the DAX off 0.36% and the FTSE 100 down 0.17% at 7:30 am ET.