A strong signal indicating a cooling labor market was enough to weaken the US dollar sharply. The move can also be seen in the U.S. bond market, where we are seeing a progressive flattening of the curve. It is worth noting that a month ago the spread between 2-year and 10-year yields was 90 bps, and now it is 50 bps. Of course, we still have a negative 10Y-2Y spread and this is an indicator of a potential coming recession.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appWe are observing a flattening of the curve in the US. Will May's hike be the last and the Fed will start preparing for year-end cuts, allowing 2-year bonds to fall more? Source: Bloomberg
The gap between the 10-year and 2-year is clearly narrowing. If this continues, EURUSD may have more support to rise. Source: Bloomberg
EURUSD broke through 1.0900 today and was already near the 1.10 level. Previously, this level was quoted in early February, when the expectation of US hikes suddenly increased. Now we have the opposite situation. Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
