The inversion of the yield curve is positive for the dollar | 06 Tháng Mười 2023

06 Tháng Mười 2023, USD/JPY

The inversion of the yield curve is positive for the dollar

USDJPY trading plan:

The surge in long-dated U.S. bond yields currently underway and driving the so-called 'bear steepening' of the yield curve will dramatically reduce the economy's chances of achieving the fabled 'soft landing' and avoiding recession. High and rising long-term borrowing costs tighten financial conditions by making it more expensive for businesses and consumers to roll over debt or get credit, and more expensive for companies to invest. A steepening yield curve is when the spread between long- and short-term bond yields widens. Either the long-term yield rises faster than the short-term yield - a bear steepener - or the short-term yield is falling more - a bull steepener. The curve is aggressively bear steepening now as investors dump long-term bonds. But what makes this situation even harder to navigate is the fact that the curve is still inverted - the two-year yield is still higher than the 10-year yield.

Investment idea: buy 148.65 and take profit 149.25.

David Johnson
Analyst of «FreshForex» company
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