The 30-year US Treasury yield is near 5% for the first time since 2007, but yields are rising globally, not just in the US. The dollar index has fallen below 100 to a three-year low, signaling a return to its historical average after an unusually strong post-COVID period, not a crisis.
Chapters
There's some in the media who are suggesting that the US are looking like an emerging market debt crisis here. This is false in my opinion. I mean, yes, US yields are rising. I'd go and check out the 30-year yield, it's nudging 5%. Why is that important? It's important because we haven't really had 5% yields on a 30-year Treasury since 2007. But yields are rising all over the planet. So here's your big difference. Yields, yes, they're rising in the US, but they're rising in the UK, they're rising in Europe. Check out the Japanese 30-year yield, right? It's about yield differential. You're only going to get typical move into the US to take advantage of higher yields, appreciating the dollar. The normal way of things isn't happening because yields are rising everywhere. There's always back to Trump. There's definitely a negative bias against US assets at the moment. We'll often talk about what's called the dollar index when we're thinking about the dollar's value against a basket of currencies. And what's kind of psychological and the reason why it's getting a lot of airtime the press is that the dollar index is below 100. It's a 3-and-a-bit-year low for the dollar index, right? But go back over the last couple of decades, and 100 on the dollar index is about average. So I think you can look at this in a different way when you're thinking about the dollar. I think we've come to the end of a period, really post-COVID, where the dollar's been abnormally expensive, and actually it's just returned to its mean. I would say. So the dollar move, I'm not getting too alarmed about.
