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Opinion
Mark Gilbert

Nobody Told Dollar It's OK to Fight Fed

Treasuries are allegedly ignoring the Fed and tracking the ECB. If that's true, no-one has told the dollar it's alright to fight the Fed.
is this what happens when the greenback fights the Fed?
is this what happens when the greenback fights the Fed?

The U.S. government bond market has allegedly unshackled itself from the monetary policies of the Federal Reserve and is instead at the benign mercy of the European Central Bank. If that's true, no one told the U.S. dollar.

The Financial Times reported on Aug. 31 that the correlation between five- and 10-year U.S. Treasuries had dropped to a record low, with longer-dated yields dropping while those on shorter-dated maturities had barely budged. This suggests "the link between U.S. monetary policy and U.S. bond yields has fallen apart this year, showing how fears of deflation in Europe are driving global financial markets," the newspaper said.