USD spreads are widening but that's not helping the US dollar.
If we look at 10-years today, US 10s are up 13 bps while here's what the rest of the field is doing:
- Germany +4.7 bps
- Italy +2.3 bps
- UK +3.7 bps
- Canada +10.5 bps
- Australia +9.1 bps
So the advantage of owning US dollars is widening. Normally that's dollar positive. What's happening though is that current bond holders are getting chased out. So while higher yields are more attractive in terms of inflows, the sharp capital losses are causing a flight from bonds globally and the pain is most acute in the dollar right now.
At some point, there will be more-orderly moves in bonds or outright stability and that should lend itself to dollar strength but there are plenty of moving parts at work that could delay that.
As for price action right now, the dollar has given back most of its gains and it's CAD, JPY, CHF and GBP on top of the pile. Cable has been particularly well-bid in the past few minutes but unable to break the Asian high.
