Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. Yields Surge To Start A Busy Week For U.S Lawmakers

By Matthew WellerForexSep 28, 2021 02:04AM ET
www.investing.com/analysis/us-yields-surge-to-start-a-busy-week-for-us-lawmakers-200603245
U.S. Yields Surge To Start A Busy Week For U.S Lawmakers
By Matthew Weller   |  Sep 28, 2021 02:04AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

As my colleague Joe Perry noted in his Week Ahead report, it will be a busy week for US lawmakers, with Congress trying to hash out votes on a $3.5T social welfare spending package, a $1.2T infrastructure bill, and an agreement to raise the debt limit ahead of a potential partial government shutdown on Thursday. For the uninitiated, here is a quick breakdown of where each bill stands as of writing:

  • The $1.2T infrastructure bill has already passed the Senate with help from Republicans, and Nancy Pelosi, the Speaker of the House, is optimistic that it will pass through the House of Representatives this week.
  • The $3.5T social and environmental spending bill remains controversial, with Republicans and more centrist Democrats balking at the big price tag – negotiations on that front are likely to continue, with the headline sticker price potentially working its way lower as the two sides seek a compromise.
  • Both parties recognize the tremendous cost of shutting down the government during a global health crisis, so most analysts are expecting at least a short-term agreement to keep the proverbial lights on ahead of Thursday’s deadline.

Between these big legislative priorities and Fed Chairman Jerome Powell’s clear signal that the central bank intends to announce its taper plans at its November meeting last week, US bond traders have clearly started to price in rising interest rates. Looking at the yield on the two-year treasury bond, which tends to have one of the best correlations with the value of the US dollar, rates are testing 0.28%, their highest level since the onset of COVID last March and a 10bp rise from the start of the month:

US 2-Year Treasury Yields Chart
US 2-Year Treasury Yields Chart

Source: TradingView, StoneX

Not surprisingly, given the close correlation between 2-year government bond yield and currency values, the US dollar is the strongest major currency so far this month. After retracing to its 100-day EMA to start September, the US dollar index is once again on the verge of breaking out above previous resistance in the 93.20-50 zone to its highest level so far this year:

Dollar Index Daily Chart
Dollar Index Daily Chart

Source: TradingView, StoneX

A confirmed break above 93.50 could open the door for a continuation toward the Q4 2020 highs for the dollar index in the mid-94.00s next. Meanwhile, even a pullback from this resistance area would leave the bulls in control on a medium-term basis unless the dollar index drops below its 100-day EMA in the 92.30 area.

Original Post

U.S. Yields Surge To Start A Busy Week For U.S Lawmakers
 

Related Articles

Kathy Lien
FX: Big Week Ahead, What To Watch By Kathy Lien - Oct 25, 2021 15

Inflation and GDP reports from the U.S. and Eurozone along with three central bank monetary policy announcements makes for a busy trading week. Big tech names, like Amazon...

InstaForex Group
Euro Could Finally Breakout By InstaForex Group - Oct 26, 2021

Despite the lack of some news and an empty macroeconomic calendar, the euro has dropped sharply. To some extent, it was due to a protracted period of stagnation in the previous...

Scott Barkley
EUR/NZD: More Downside Likely By Scott Barkley - Oct 26, 2021

EUR/NZD is not out of the woods yet. At the time of writing, the pair trades at 1.6172 in a channel. We are looking for an initial move to the average true range (ATR) target at...

U.S. Yields Surge To Start A Busy Week For U.S Lawmakers

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email