Dollar Basis Hints at Weakening Appetite for Treasuries

The premium the dollar commands in currency derivatives is nearly gone, an indication that foreign demand for US debt is weakening.

The dollar’s weighted-average three-month basis against five major peers, which reflects the premium or discount investors accept to borrow one currency against another, is just below three basis points, according to data compiled by Bloomberg. It is now on track to turn negative for the first time since August 2020.