The US debt safe-haven buying surges, why does the US dollar suddenly "can't stop the car"?

On Monday (September 29) Beijing time, the US bond market ushered in a round of safe-haven buying under the concerns of government shutdown. The 10-year yield fell to 4.152%, and the 30-year yield fell to an intraday low of 4.713%. The overall curve showed a flat bull market trend. This buying is not only due to the immediate pressure of fiscal stalemate, but also mixed with the inertial effect of capital rebalancing at the end of the month. Meanwhile, the U.S. dollar index fell slightly by 0.14% around 90.04, erasing some of the 0.5% gain accumulated last week due to the cooling of Fed's interest rate cut expectations. The stock market seemed relatively calm, as if playing a coward game with congressional leaders, with the index fluctuating slightly but there was no panic selling.

At present, the market focus is shifting from last week's job data to this week's non-agricultural outposts, and potential fiscal disruptions to economic indicators. In the short term, the decline in US Treasury yields is quietly eroding the bullish momentum of the US dollar through interest rate transmission mechanism. We need to be wary of how this linkage evolves into a clearer trend signal before the data is released.

Fiscal deadlock and geopolitical concerns: U.S. debt support and dollar pressure at the fundamental level

The immediate reaction of the U.S. bond market is first caused by the tug-of-war between the two parties in Congress on the short-term spending bill - if it cannot be finalized before Tuesday, the federal fiscal year will enter a partial shutdown on Wednesday. This is not the first time, but the potential consequences of this time are more worth noting: the closure may not only postpone Friday's non-farm employment report for several days, but may also affect the preliminary data collection next month, amplifying the negative interpretation of the labor market. Historical experience shows that similar events often cause the US dollar to weaken briefly before the closing point, and then rebound after resolving, but the current environment has changed - last week's strong economic data has reached the end of the yearThe expectation of storage easing has been xn--xm-6d1dw86k.compressed to 40 basis points, while doubts about closing have further strengthened the market's perception of "labor market defense". A well-known investment bank G10 foreign exchange strategy director pointed out that this shift in the Fed's reaction function will extend the bear market pattern of the US dollar, because an earlier rate cut can buffer the decline in employment, but it xn--xm-6d1dw86k.comes at the cost of higher-than-expected inflation.

At the same time, the potential escalation risk of the situation in Russia and Ukraine is injecting an additional safe haven premium into US debt. Geometric events have occurred frequently recently, and the market has begun to count higher military expenditures, which coincides with the "geoeconomic" perspective of well-known economic xn--xm-6d1dw86k.commentators: the assumption of traditional market-political separation is facing tests, and political factors are quietly reshaping the boundaries between economic policies and asset pricing. Against this background, the attractiveness of US bonds as a quality safe-haven asset is naturally rising, driving the front and back ends of the yield curve to move downward simultaneously - the 10-year period fell by less than 4 basis points, and the 2-year period narrowed by 2 basis points more gently. This flattening is not a mere maturity premium adjustment, but a xn--xm-6d1dw86k.comprehensive response to fiscal uncertainty and geopolitical friction.

The statements of Fed officials further strengthened this fundamental tone. In a speech Monday morning, the Cleveland Fed president reiterated ongoing concerns about inflation: price pressures in the core and service sectors remained, and the 2% target has become a distant target since the first half of four years. To balance her dual mission, she advocates maintaining policy restrictions to ensure inflation returns to track. Although these remarks are not unexpected, under the magnifying glass of doubts about closing the door, the Fed's sensitivity to economic downturn risks. The familiar logic is: when inflation stubbornness coexists with employment softening, the market often turns to U.S. bonds for buffering, while the dollar is under pressure due to the expected "higher and longer" interest rate path. Coupled with this week's data schedule, the home sales index for sale and the Dallas Fed manufacturing survey late Monday will provide a preliminary vane for non-agricultural sectors - the consensus expects the former to rebound slightly by 0.3%, while the latter may continue the chaos of regional surveys, and any weak readings may exacerbate US bond buying.

From a broader global perspective, the yen stood out in this round of adjustments, depreciating 0.5% against the US dollar to 148.77, partly thanks to the enhanced hawkish signal within the Bank of Japan. An economist from European investment bank suggested that in the context of Asian monetary policy differentiation, the short positions of the US dollar/JPY are worth noting, which indirectly supports the relative attractiveness of US bonds - after all, in the context of loose global liquidity, the decline in US bond yields is attracting funds to divert from high-yield dollar assets.

High-level kinetic energy decay: Analysis of US Treasury-USD linkage under technical signals

Turning to the technical level, the 240-minute chart of US Treasury yields is at a critical turning point after a round of upward trend. The current 4.152% quotation just fell back to the Bollinger band's middle track 4.161%, and the long-short tug-of-war is about to break out. Since bottoming out at 3.987% in mid-September, the yield has been in line with the strong rebound of the US dollar index, breaking through the middle track and approaching the upper track by 4.198%, setting a high of 4.202%.point. However, the MACD indicator has a dead cross - the DIFF line (0.008) passes down the DEA line (0.013), and the bar chart turns to a negative value (-0.009), which clearly shows the decline of the short-term upward action energy. The narrowing of the Bollinger band opening implies that the volatility may slow down, but the position of the middle rail as a watershed of long and shorts cannot be underestimated: if it is confirmed to be lost, the support range of 4.12%-4.14% below (the Bollinger lower rail overlaps with the previous platform) will face a test. On the contrary, if it recovers quickly, it may rekindle the test of resistance of 4.17%-4.20%.

This technical signal is not isolated, but is highly resonant with the 240-minute chart of the US dollar index. The US dollar index is currently hovering around 97.97 (corresponding to the adjustment of 90.04 under the wider index framework), and is also in the consolidation stage after the rebound is high. The pull-up started from the low point of 97.17 last week, pushing the price through the Bollinger middle rail of 98.0826, once hitting the peak of 98.5950, but then fell back and fell and fell to the middle rail. MACD's DIFF (0.1106) crossed DEA (0.1720), and the column turned green (-0.0614), issuing a turning point warning. Support level 97.57-97.70 (the line between the center and the front low) has become the current focus, while resistance is in the upper track 98.5733 and the recent high 98.20-98.60. The linkage between the two charts is obvious: the upward trend of US Treasury yields often provide interest rate spread support for the US dollar, but the current momentum is attenuating simultaneously, indicating the start of a high-level correction.

When examining these indicators, you will always naturally think of the connection of fundamentals: the data-driven rebound last week was based on the pricing of the Fed's high interest rate expectations, and the dual uncertainty of the closure and Russia and Ukraine is amplifying the depth of the US dollar's correction through the decline in US Treasury yields. The stable opening of the Bollinger Band further strengthens the expectation of range oscillation - the US Treasury yield may hover at a narrow range of 4.13%-4.17%, while the US dollar index may test below the 90.00 mark. This technological-funnel perspective helps us understand why the stock market can survive this round without worries, while the bond exchange market is quietly reshaping its risk appetite.

In addition, Monday's Treasury bond auctions—$83 billion in 13-week and $73 billion in 26-week notes—will also provide immediate liquidity feedback. If the bid coverage exceeds expectations or the tail of the yield narrows, it will further verify the resilience of safe-haven buying, otherwise, it may accelerate the technical pullback. xn--xm-6d1dw86k.combined with the speeches of the Presidents of the St. Louis Fed and the President of the New York Fed (both voted, hawkish and neutral coexist), these events will inject catalysts into technical signals and test the market's ability to digest the promise of "restrictive policies".

The US dollar path under the transmission of US bonds: the interweaving of policy independence and the rebalancing of the end of the month

The impact of US bonds on the US dollar has never been a one-way linear transmission, but a gradual penetration through multi-layer channels. In the current environment, the flat trend of the yield curve is quietly weakening the relative attractiveness of the US dollar: on the one hand, doubts about closing up are pushing upThe demand for hedging strengthens the role of US bonds as a "quality flight" and indirectly diverts long funds from the US dollar; on the other hand, the potential Fed independence friction - the legal dispute surrounding a director - has not directly shaken the policy tone, but has sown seeds of hidden worries in the market. This uncertainty often amplifies the decline in the maturity premium of US bonds, and then suppresses the strengthening logic of the US dollar through real interest rates.

A senior market observer recently emphasized in his xn--xm-6d1dw86k.comments that although the "double FOMO" (a pursuit of US exceptionalism and AI-driven pursuit) is supporting the resilience of the stock market, the bond market has begun to deliberate more pragmatic risk adjustments - a global consensus of fiscal loosening and monetary easing, the decline in US bond yields is becoming the "invisible driving force" of the US dollar's correction. This echoes Wall Street's vigilance on the credit market: Although there is no sign of a bubble in the fevered demand for corporate bonds, if the closing is extended, it may expose hidden liquidity concerns and further boost US bond buying. The inertial effect of the month-end rebalancing cannot be ignored - institutional funds often extend their duration at the end of the quarter, favoring the back-end curve, which is the reason for the 5 basis points decline in the 30-year yield.

From the perspective of the US dollar, the strength of this transmission mechanism depends on the integrity of this week's data chain: if a small recovery in sales of homes for sale is expected, it will alleviate concerns about weak housing markets and support stability of US debt; but the chaotic readings of the manufacturing survey may strengthen pricing for the slowdown and push yields to bottom out further. The relative strength of the yen and the Australian dollar is also a reminder that the adjustment of the US dollar is not an island, and the differentiation of the central bank's path is amplifying the global echo of the US bond signal through cross-exchange rates.

Short-term outlook: Gain momentum in range fluctuations, beware of breakthroughs under data catalysis

Looking forward in the next 2-3 days, the U.S. Treasury yield market may continue a narrow range of 4.12%-4.20%, and the middle track 4.161% will become the core of long-short offense and defense. If the RBA keeps interest rates unchanged on Tuesday and the non-farm outpost data is neutral, US bond buying may gradually stabilize at the end of the month, pushing yields to moderately stabilize around 4.15%; on the contrary, if there is no progress in the shutdown deadlock, coupled with the sudden risks of the situation in Russia and Ukraine, the probability of a 4.13% drop in the rate of return will rise to more than 60%, and the trend of flattening the curve may intensify.

The US dollar index will seek direction within the framework of 90.00-90.50, and bear the impact of the decline in US debt. If the intraday high of 90.20 above cannot be effectively broken, the test of the 90.00 mark below will become the focus. The attenuation signal of technological momentum, xn--xm-6d1dw86k.combined with fundamental fiscal pressure, implies that the bears' tilt is stronger in the short term - if the closing xn--xm-6d1dw86k.comes true on Wednesday, the immediate impact of the non-farm extension may push the index to around 89.80. But if the meeting of congressional leaders resolves some of the doubts, the US dollar may use the return of funds at the end of the month to regain the bulls, and test the resistance of 90.50. Overall, this round of adjustments will test the market's determination to the Fed's "labor defense" xn--xm-6d1dw86k.commitment. As an anchor factor, the fine adjustment of its yield path will continue to dominate the short-term rhythm of the US dollar until the full picture of this week's data emerges..

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