The US Yield Curve is Steeper, USD Slows Down

On Tuesday, the greenback halted its march versus major currencies even as the yield curve remained steeper, suggesting confidence in the country's economy in the immediate term. With the greenback halting its march, it helped stabilized stock market indices around the world. However, even with this retracement, the 10-year treasury yield shows signs of rising and is presently trading above the 1.15 percent mark. 

Details: 

Analysts, based on the yield curve, not predicts the FED to begin raising rates in 2023, a forecast that may not be accurate. Still, there are hints of capital flowing into the USD and other US debt instruments, especially from second-tier debt markets and some emerging economies' currencies. As the USD rallied, it was stretching gains against the AUD, CHF, Yen, and the NZD. Overall pointers on the ground reveal that the USD could be preparing for a long-term bull market, a move that may stifle the stock market and indices.

Impact on the USD: 

Bullish. Rising bond yields mean the FED could begin raising rates in two years. The steeper yield curve supports the USD as a haven, explaining capital injection from several markets, propping the currency. 

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