Jason talks about why the US Dollar Index (DXY) is so weak lately. Since late June, the DXY has continued to fall with little rallies.
According to global macro expert, Lyn Alden, of the $3 trillion or so in net US Treasury issuances this year so far in 2020, foreigners have only bought $194 billion. See her Tweet here:
Treasury data for June is out today. The Foreign sector bought $60B in Treasuries in June.
Overall foreign holdings of Treasuries are still below February levels, despite record Treasury issuance since then. pic.twitter.com/1TJTba3lKI
— Lyn Alden (@LynAldenContact) August 17, 2020
There are a number of fundamental reasons for this having to do with the poor state of the global economy and global trade and foreigners looking in horror at the Fed’s official balance sheet growth and M2 money supply growth.
Also, there is a record net short position in the Dollar Index now. Normally this is a contrarian indicator in the past of a rally coming but who knows?
Most of the US Treasury yield curve (1 month to 10 year) is already within 60 basis points of each other. Monitor the yield curve for free here: www.gurufocus.com/yield_curve…
Is this officially yield curve control by the Fed yet?
What will cause the Dollar to rally? Will it be the Dollar shortage that’s pulling on the other side of the Dollar Tug of War?