Great chart: USD index vs. 2Y10Y yield curve

As we mentioned it in one of our previous posts, there has been a strong co-movement between the US Dollar and the 2Y10Y yield curve in the past 15 years, but the relationship was potentially going to break out as the US dollar was getting extremely oversold while inflation expectations have been constantly rising in the past few months (usually leading to yield curve steepening). This chart shows that while the the USD index has stabilized at around 90-91 since the start of the year, the 2Y10Y yield curve has steepened sharply by 45bps to 1.25%.

Source: Eikon Reuters

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