XE Market Analysis: Europe – Feb 17, 2021

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The dollar has traded higher amid the sharp spike in U.S. Treasury yields, which has been too much to ignore for market participants, even allowing for the relatively high inflation rate in the U.S. relative to peers (which has a depressing effect on real yield differentials). The 10-year T-note yield printed a high at 1.330% yesterday, which is the loftiest level in a year. The low seen last year was 0.380%, while the yield has risen by 20 bp from low to high over the last week. The pronounced bear steepening in the yield curve is consistent with reflation trade positioning.