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Dollar selloff spreads across G10 as markets focus on $40T debt risk

Despite some partial rebound in yields, the dollar index stays near a three-month low as investors increasingly price structural financing pressure from the maturity-shifting buyback plan.

Reported · Written up by our desk · Major Pairs

The dollar selloff has broadened across major G10 currencies, with the DXY hovering just above 98.50 near a fresh three-month low even after some long-yield declines began to reverse, according to Action Forex.

The weakness began after Treasury surprised markets by expanding long-dated debt buybacks, and Treasury later said it would at least double buybacks in the 10-20 year and 20-30 year nominal sectors from $2 billion to $4 billion per operation between September 9 and November 4.

Action Forex reports that UBS and DBS argue the buyback program does not remove the underlying borrowing requirement, instead redistributing Treasury’s financing burden along the yield curve, which they say differs from Fed-style quantitative easing.

With US federal debt just crossing $40 trillion and Treasury Secretary Bessent’s view that the deficit has “likely peaked” facing limited confirmation from fiscal data, markets appear to be shifting interpretation toward the structural debt issue, keeping the dollar from recovering durably even as yields fluctuate.

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