Weekly Asset Heatmap

Weekly Asset Heatmap: U.S.

With uncertainty building over Fed succession and the debt ceiling, our signals indicate big moves in the dollar and U.S. yields are forthcoming.

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Our signals suggest big moves in the Dollar Index and U.S. 10-yr yields within the next 1-2 weeks

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Salient threads in the digital debate driving this movement include:
  • According to one of our key sources, the question of who will succeed Janet Yellen at the Fed could create greater uncertainty for markets than past successions.
  • Sometime in the beginning of October, the United States will exceed its borrowing authority. If Congress fails to pass a bill raising the debt ceiling before then, bank stocks would probably suffer, and in the worst case there would be higher funding costs, a decline in liquidity, weaker loan demand and decreased fee income.
  • At the recent Jackson Hole retreat, policymakers blamed rising populism on the free trade backlash and criticized President Trump's push to roll back the safety nets created after the 2008 crisis.
  • The Trump administration continues to be inconsistent. It has failed to make progress on major legislative priorities (healthcare, tax reform, infrastructure), but it is making sweeping changes in environmental regulation, immigration enforcement, criminal justice and other areas.
  • Federal Reserve Bank of Kansas City President Esther George believes that there might be an opportunity to raise rates again in 2017 should U.S. economic data hold up. George is a policy hawk.
At the time of writing, the DXY was trading at 92.220.
U.S. 10-Yr yields are currently 2.16% with a forward implied yield of 2.36%.
The FED next meets on September 20.