USDIDX declines after reaching 110 level 💵Fed Schmid signals a 'significant time lags' in the impact of new administration policies

The US Dollar index (USDIDX) declines almost 0.3% today after approaching the psychologically significant 110 level. We can see, the 10-year treasury yields are still high today, losing only 1.5 p.p, at 4.79%

• Trump administration sources told yesterday about planning increasing US tariffs partially (2 to 5% monthly) to avoid inflation shock
• According to Reuters economic poll the US 10-year treasury yield will cross 5% this year, according to 24 of 36 bond strategists; however in a year it will fall to 4.3% vs 4.25% estimated in December
• This may suggest, that strategists expect disinflation to continue despite higher treasury yields; eventually higher yields and tight Fed policy will disrupt US economic growth and labour market, making Fed stance more dovish
• OIL declines 0.5% today, after US Secretary of State Blinken told that a Gaza ceasefire is right on the brink, while the US officials are waiting final word from Hamas.

Fed Schmid remarks

• The Fed's influence on housing supply is limited.
• There will be significant time lags in the impact of new administration policies.
• Regarding tariffs, the Fed will act if there is disruption to either of it's mandates.

USDIDX (M15 interval)

Source: xStation5