Image Source: Pixabay

The day the dollar departed from providing a safe haven wasn’t yesterday, or some day in the near future.

It was some time in July 2022.

Even though the Federal Reserve boosted interest rates earlier that year, the price of US Treasuries went down and then sideways.

Then something more unusual happened.

Gold went up.

Why is that more unusual?

Because the price of gold is usually suppressed when the Fed raises interest rates.

Instead, the opposite happened.

Now, almost two and a half years later, we are seeing the results…

The world is losing faith in the US dollar.

The Wall Street Journal reports:

The Dollar and the Bond Market’s Ominous Message for Trump

“Normally when investors are this scared they seek safety, and nothing is safer than the dollar and Treasury debt.

But despite mounting fear of recession, the usual flight to safety hasn’t materialized. That is for several reasons, some relatively superficial, such as inflation risks, and one more fundamental…

Since Feb. 19, Treasury yields are down a bit, but since April 2, they are up about a quarter-percentage point. They rose sharply Tuesday night and Wednesday morning before Trump announced his pause. “People were getting a little queasy,” he admitted…
 

…Nonetheless, technical factors can’t explain why bonds and the dollar began behaving strangely weeks ago. The more fundamental explanation is that global investors might be changing how they view the U.S.”

Since the system relies on debt, the most accurate indicator of value for the world’s reserve currency are US treasury bonds.

Specifically, movements in the 30-Year Treasury Yield, which has been trending upward since 2022.

And most recently, has had the sharpest, sudden spike upward in years.

And the biggest change in yield for the 3-Day Treasury since 2020 too.

This is the dollar, departing from reality.

The first sign is high treasury yields and high gold prices. The second sign has been the recent sell-off in US treasuries.

If this continues, which it most likely will, you can expect capital controls to be next on Trump protectionist priority list.

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