The US greenback — and its relationship with bond yields — has recently given economists much to chew over. The US dollar index, which measures the value of the greenback against six foreign currencies, has dropped more than 8% since January. Last month, it hit its lowest level in three years.
At the same time, US bond yields have been rising, defying a standard economic pattern. In times of uncertainty, investors typically flock to US Treasuries, viewing bonds as a safe place to park their money. As a result, you’ll usually see bond yields fall when stock markets slump, and the dollar typically rises. During the crises of 2008 and 2020, for instance, the value of the greenback increased.
