Forex
Home›Forex›Major Pairs›Rising global bond yields and US fiscal worries challe…
Rising global bond yields and US fiscal worries challenge USD safe haven
Rabobank flagged the US 30-year Treasury yield surging to its highest level since 2007, adding risk to the USD's safe haven bid if global bond pressure persists.
Rabobank told FXStreet that strains in global bond markets and growing concerns about US fiscal discipline are undermining the traditional safe haven role of US Treasuries and the US dollar.
Rabobank Senior FX Strategist Jane Foley said rising term premia and changes in Treasury ownership are key medium-term risks, noting that demand for US 10-year note and 30-year bond auctions was decent but yields rose to multi-year levels to attract buyers.
FXStreet reported Foley warning that if pressure on global bonds continues, it could test Treasuries and the USD in periods of elevated uncertainty, which traditionally lift both assets.
Foley also pointed to higher Treasury holdings by hedge funds that can be more sensitive to price, arguing that the Treasury market could be less protected by the US's long-standing “exorbitant privilege,” and said gradual de-dollarisation could erode USD dominance over time.