'Buy America' is the theme as the market anticipates some kind of trade deal to be announced later today.
That's led to strong US dollar bids across the board that have accelerated in the last hour. In addition, stock markets are at the highs of the day with the S&P 500 up 1.4% and the Nasdaq up 2.4%. After falling into negative territory pre-market, the Russell 2000 is up 1%.
Aside from trade, one thing that could be driving bids is the tone from Congress around the big tax cut message. It's tough to trust a politician but all the comments have been positive and upbeat. I think the flipside is that it will come with a huge budget deficit because that seems to be the path of least resistance.
So it's not truly a 'Buy America' theme as bonds are selling off today. Bessent earlier highlighted falling 2-year yields but those have reversed course and are now up 3 bps and up 10 bps from the lows. We've also seen Fed cut pricing in the year ahead come in by 6 bps.
This article was written by Adam Button at www.forexlive.com. Read More Details
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