US Dollar Crumbles After Treasury Boosts Long-Term Bond Purchases
The US Dollar (USD) struggled on Wednesday after the Treasury Department unexpectedly announced that it will double the size of some long-dated debt buyback operations to support market liquidity.
This move was seen as a 'soft-form financial repression policy aimed at containing the long-end of the US yield curve' by Deutsche Bank's George Saravelos, who warned this is 'negative for the Dollar.'
The USD Index fell 0.9% and touched its lowest level in nearly three months below 99.00, while the yield on 30-year US Treasury bond declined sharply and fell nearly 2%, and the yield on the 10-year reference declined 1.4%.
Despite policy headwinds, the USD retains defensive appeal, according to BNY's strategists, who acknowledge a 'growing list of Dollar-negative catalysts' but caution against being aggressively short the greenback as a portfolio hedge.