The low yield of U.S. government-bond | 12 Februari 2021

12 Februari 2021, EUR/USD

EURUSD trading plan:

U.S. government-bond prices climbed after soft inflation data indicated that investors will have to wait longer for the big increase in consumer prices that many have been expecting this year. Faster inflation tends to drive up Treasury yields because it erodes the purchasing power of bonds’ fixed payments and can eventually lead the Federal Reserve to raise short-term interest rates. Market-based inflation expectations, based on the extra yield investors demand to hold nominal Treasurys over Treasury-inflation protected securities, slipped after the data were released. The 10-year break-even rate, indicating annual inflation expectations over the next decade, was around 2.20%. This is a negative signal for the dollar!

Investment idea: Buy 1.2112 and take profit 1.2168.

David Johnson
Analyst of «FreshForex» company
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