US 10-⁠yr yield → US dollar

Common explanation (Cause · same direction): When US rates are relatively high, money flows into dollar assets.

This issue: US 10-⁠yr yield at 91 (hot), US dollar at 45 (neutral) — at least one is in the neutral range (40⁠–⁠60), so we make no call this issue.

Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.

Where it stands now

Where the two indicators stand this issue

US 10-⁠yr yield: 2.09 percentage points above its 10-year average. US dollar: 1.3% above its 10-year average, but by less than it usually is.

Tests

Does this link hold up?

Common explanationWhen US rates are relatively high, money flows into dollar assetsSource: Federal Reserve Board, “Monetary Policy and Exchange Rates during the Global Tightening” (2024). It uses the 2-year rate differential, not the 10-year Treasury yield, and shows only that the two move together.
Tested against our dataAgreement between the positions of US 10-⁠yr yield and US dollar (3-month lag), measured in the direction of the common explanation: −0.64. Looking at every 5-year period (shifted one year at a time), the two moved in that direction in 3 of 8; data start only in 2013. Our data show the opposite
Periods when it did not holdAcross 8 5-year periods, out of step in 2013⁠–⁠2025.

History

The two lines, overlaid

Data: Federal Reserve H.15, via FRED (Federal Reserve Bank of St. Louis); Bank for International Settlements (BIS), nominal effective exchange rate of the US dollar (broad basket). Positions: our calculation.

US 10-⁠yr yieldUS dollar

Limits

What this card cannot tell you

Moving together does not prove that one causes the other.
Links change over time; periods when this one did not hold are listed in full.
This is the historical record, not a forecast.

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