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The soaring US Treasury yield has impacted the stock market; how should this be addressed? The following events deserve close attention!
This wave of decline is closely related to the rise in U.S. Treasury yields. Since Federal Reserve Chairman Powell clearly shifted focus to inflation at the December meeting last year, the increase in Treasury yields has put pressure on the U.S. stock market.
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The yield on the United Kingdom 30-year government bonds has risen to 5.472%, the highest since 1998.
The UK 30-Year Treasury Notes Yield rose to 5.472%, reaching its highest level since 1998, with an increase of 6 basis points during the day. The UK 10-Year Treasury Notes Yield climbed 6 basis points to 4.90%. Last week, the UK bond market was tumultuous, with Bonds facing significant selling pressure, causing the British Pound Exchange Rates to plummet. On Monday (January 13), in the Asian market, the British Pound continued to decline against the US Dollar, hitting a low of 1.2125, marking a new low since November 2023. Although the situation began to stabilize in the latter half of last week, the British Pound still closed significantly weaker. Meanwhile, uneven data led to fluctuations in the Euro last week; despite these adverse factors, the Euro against the British Pound.
Goldman Sachs expects the dollar to rise by 5% or more, and the euro against the dollar is likely to fall below parity within six months.
Goldman Sachs has raised its forecast for the USA dollar due to a strong USA economy and potential increases in tariffs, which may slow down MMF easing policies. Strategists such as Kamakshya Trivedi wrote in a report, "We expect the USA dollar to rise by about 5% in the next year due to the implementation of new tariffs and the continued strong performance of the USA." Even with this adjustment in the forecast, "We still believe the risks lean towards further strengthening of the USA dollar." This is the second time Goldman Sachs has raised its forecast for the USA dollar in about two months, mainly due to the USA's persistent strong growth and President-elect Trump's plans to impose tariffs, which may exacerbate inflation.