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US Treasury buyback expectations reinforce bearish dollar momentum
TD Securities says the dollar has typically seen modest weakness, on average about 0.3%, when Treasury curve bull flattening coincides with stronger US equities.
FXStreet reports that TD Securities strategists argue a US Treasury buyback announcement has reinforced bearish momentum for the US dollar, using long-running historical relationships across the US Dollar Index, equity moves, and Treasury curve behavior.
The note highlights that bull flattening paired with stronger US equities has weighed on the dollar in past episodes, and that even in a rare scenario where equities rise during such a backdrop, the dollar has tended to weaken modestly rather than rally sharply.
TD Securities also points to prior support for a bearish turn after data that included muted CPI and negative retail sales in July, alongside concerns around US institutional credibility and the prospect of financial repression after the buyback announcement.
Looking ahead, the strategists say a US equity shock could still spark a dollar rebound in 2026, particularly if the Treasury curve shifts in a way that increases risk-off behavior, with this path described as the biggest tail risk to the bearish dollar view.
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