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Why is the US debt rate uplifting while the dollar continues to weaken?

Enlarged font  Narrow font Release date:2018-06-16  Browse number:9
Note: Reporter Wen Jicong reported: in the near future, the yield of US Treasury bonds and the US dollar showed the opposite t
 Reporter Wen Jicong reported: in the near future, the yield of US Treasury bonds and the US dollar showed the opposite trend, the yield of US Treasury bonds rose obviously, the 2 - year yield was once 2%, and the 10 - year yield exceeded 2.5%. At the same time, the dollar has plunged in the near future. How can we understand the yield of US Treasury bonds, but the dollar is weakening? The journal believes that the trend of the two is not contradictory, which is precisely the reflection of the fact that the fact that the United States is facing inflation risk, the growth of the United States and the euro zone and other countries and regions, and the narrowing of the policy difference, is a reflection of the asset price.
According to the research report, the obvious rise of US Treasury bond yields is mainly due to the gradual upward trend of inflation. In terms of decomposition, the nominal yield of the recent 10 year treasury bonds has increased rapidly, mainly driven by inflation expectations, but the actual yield is relatively stable. The main factors that trigger inflation expectations include the final landing of the tax reform program, which the Federal Reserve thinks that the tax reform may lead to excessive inflation pressure to increase the Fed's faster rate of interest rate hikes, and the major economic data of the United States, including the manufacturing industry PMI and the core CPI, which are all overexpected.
The weakening of the growth gap between the euro zone and the United States is due to the weakening of the growth gap between the euro zone and the United States, and the European Central Bank may adjust the forward-looking guidelines for monetary policy in early 2018, making the time point for the narrowing of European and American policies coming in advance. Since 2016, the economic growth gap between the euro zone and the United States is narrowing since the pressure of deflation and the steady recovery of the economy, and the gap between the economic growth and the United States, which is the main impetus and the overall background of the euro's appreciation of the US dollar.
According to the report, the basic logic and main contradictions of the future leading US debt interest rate and the dollar trend remain unchanged. The trend of the US debt is still inflation, and the trend of the US dollar index is still the difference between the US and the euro zone and other countries, and the policy is poor. In 2018, the US core inflation is expected to shake off the weak trend and the US bond yield is facing upward risks. In view of the simultaneous recovery of the US economy and the global economy, and the start of the U.S. tax reform program, the report expects us GDP growth to be further higher than the potential output level in 2018. Therefore, the US core CPI is expected to move towards the 2% level step by step. based on this prediction, the Federal Reserve is expected to raise interest rates 4 times in 2018. In view of the fact that the current rate of interest rate increases in the federal funds rate is only two times, the yield of treasury bonds may be hit when the Fed revised forward looking guidelines for inflation over expectation. When the Fed raised 4 interest rates, the US 10 year treasury bond yield is expected to reach about 3% by the end of the year.
According to the report, the global interest rate increase cycle in 2018 is expected to enter the second half of the speed-up and the narrowing of the policy gap, which is expected to concussion in the short term, but the whole year is facing downward pressure. With the US spillover effect on global economic growth gradually revealed, the global recovery has been synchronized and trade volume has risen since 2016. Compared with the more fully revival of the United States, the euro zone and the emerging economies are in the early recovery, and in further recovery, the gap in growth between the United States and the United States is expected to be further narrowed. As the trend of recovery and re inflation is further /confirm/ied, it is expected that the monetary policy of these countries and regions is expected to enter the period of loose reduction, tightening and adding, and the gap between the monetary policy of the United States and the United States will be gradually narrowed.
 
 
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