A sharp flattening in the U.S. government bond yield curve this week could be a bearish sign for the dollar, currency analysts say.
Yields on five-year Treasurys have shot up since last week’s Federal Reserve meeting raised the prospect of interest rates rising sooner rather than later, narrowing the gap with 30-year bond yields to their tightest spread since 2009.
Although a rise in yields at the short-end of the yield curve usually boosts the appeal of the dollar, a fall in yields at the long-end reflects concerns about the economic outlook and this is weighing on the currency, analysts say.
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