FX Daily: Introducing the Bessent Put in Treasuries
USD: Investors greet a more interventionist Treasury While increasing liquidity buy-back operations by $2bn might seem like rearranging deckchairs on the Titanic given the US national debt of $40tr, yesterday’s intervention by the US Treasury has been warmly greeted by investors around the world. As ING’s Padhraic Garvey writes, this unscheduled announcement tells us the ...
Investors have welcomed the US Treasury's more interventionist stance, despite the vast national debt of $40 trillion. The unexpected $2 billion buy-back operations signal the Treasury's displeasure with recent long-term bond market sell-offs. This move has lifted equities and weakened the dollar, particularly against currencies like the Norwegian krone, New Zealand dollar, and Swedish krona.
The Bessent Put, a potential safeguard for risk assets this summer, has made carry trade strategies attractive. The minutes from the July FOMC meeting were not hawkish, resulting in a 5 basis point drop in short-dated US yields. With light data available today, the US Dollar Index (DXY) may drift lower towards 98.65, potentially reaching a 98.00 level if risk assets continue to perform well.
For the euro, the US Treasury news has boosted EUR/USD, potentially ushering in a more stable investment environment. Meanwhile, Sweden's Riksbank is expected to maintain its 1.75% policy rate, suggesting no immediate changes are on the horizon.
Written by urgent.news from Hellenic Shipping News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
