On Tuesday, in a post on X, investor and economist Peter Schiff highlighted U.S. 10-Year Treasury yields climbing back to 4.5%, despite the “trade truce” with China early this week, while the U.S. dollar “resumes its broad-based decline.”
What Happened: “Despite the trade truce, the world is losing confidence in the dollar and our ability to get our fiscal house in order,” Schiff said, highlighting structural issues, rather than short-term diplomacy, as driving factors behind recent market behaviors.
Schiff says, “The consequences of de-dollarization will be profound,” referring to a potential pivot by foreign central banks and investors away from U.S. debt and currency reserves in recent weeks, leading to high borrowing costs for the U.S. Government.
10-Year U.S. Treasury Yield hit its highest level in a month at 4.45% on Tuesday, up from 4.17% at the beginning of this month, and 3.99% at the beginning of April. This comes as markets continue to assess the impact of the trade de-escalation with China this week, according to TradingEconomics.
The U.S. Dollar Index (DXY) is flat during the day, trading at 100.95, up 0.001%, while being up 0.72% for the month. The currency witnessed a pullback following a sharp rally on Monday, mainly owing to the soft inflation data, which hints at a rate cut by the Federal Reserve, according to Reuters.
See Also: Tariffs Paused, But Not Gone: Economist Says Inflation Risks Remain
Why It Matters: Other analysts and economists have expressed similar concerns. Macro researcher Stephanie Pomboy described Monday's market rally as a “headline sugar rush” fueled by tariff optimism, warning that “the market's partying on tariffs, but the foundation is cracking” amid rising Treasury yields.
Last week, Michael Hartnett, a Chief Investment Strategist at Bank of America Corp. BAC, warned that 5% Treasury yields could compel the U.S. Government to walk on its protectionist trade measures.
Analysts at Deutsche AG DB early last month referred to the simultaneous collapse of U.S. equities, the dollar, and Treasury yields as “uncharted territory,” which they blamed squarely on markets having “lost faith in U.S. assets.”
This comes as the U.S. Treasury Department ramps up its borrowing, projecting $514 billion in net marketable debt being issued during the current quarter, which is a staggering 317% over its own forecasts two months earlier, at $123 billion.
Price Action: Photo Courtesy: Jason Raff on Shutterstock.com
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