Dollar on Shaky Ground Amid Treasury's Interventionist Approach
The US dollar is on shaky ground and faces a weekly loss as investors view the Treasury's bond-market buybacks as only a temporary fix, raising concerns about officials' increasingly interventionist approach.
Treasury Secretary Scott Bessent said he may increase government repurchases of Treasuries even further. The department surprised markets by pledging to at least double the size of its buybacks of longer-dated debt in an effort to rein in bond yields.
Long-dated yields jumped this week, with the 30-year yield reaching its highest level since 2007. Traders cited concerns over the deteriorating fiscal outlook, heavy issuance, geopolitical risk stemming from the war with Iran, and uncertainty over the Federal Reserve's policy path.
Analysts say holding yields down will simply shift the burden of fiscal concerns onto the currency. Bannockburn Global Forex chief market strategist Marc Chandler said 'The market is pushing back.' The dollar index fell 0.05% to 98.79, with the euro up 0.03% at $1.1682.