Analysis: Dollar at Risk, U.S. Treasury Buyback Plan Looks a Lot Like Yield Curve Control

Odaily News - Macroeconomic forecasting consultancy TS Lombard stated that the U.S. Treasury's move to buy back ultra-long-term bonds "sounds a lot like" yield curve control (YCC), adding that artificially suppressing yields will weaken the dollar.

Chief Economist Freya Beamish wrote in a report: "The U.S. is implementing pro-cyclical fiscal policy, and interest rates should be rising, which would be bullish for the dollar. Long-term bond investors want compensation, and the Treasury is intervening to keep yields low while further shortening the duration of an already short average debt maturity." "This sounds a lot like YCC," she added. "The only question is which way the market will win: either by continuing to put pressure on long-term yields, forcing the Fed to step up as the responsible party and raise rates earlier than markets currently expect; or by selling off the dollar. The Fed will eventually raise rates."