Treasury Rates and the US Dollar

By Nicolas Abington | Crescent City Capital Market Analyst Intern

It’s been almost impossible to miss the huge decreases in the stock market’s biggest indices over the past week. The S&P 500, DOW Jones Industrial Average, and the Nasdaq Composite have all taken losses upwards of 8.14%. The fed has responded with emergency measures by cutting the federal funds rate by 50 basis points to 1-1.25%. These actions had a minimal effect on the market as the coronavirus continues to spread causing worldwide panic and supply chain worries.

But most importantly, treasury yields have hit all-time lows, going down to as much as .89%. The reason that this should be the main focus out of this week is the relation between treasury yields and the value of the US dollar. When treasury yields begin to go down, that is a bearish indicator for USD. A weaker USD could mean that American investors will begin searching for alternate investments for their safety nets.

These are trying times in any available financial market but it’s good to remember that you should just keep your head on your shoulders and focus on the opportunities rather than the chaos.