Following a somewhat hectic time in Europe, with Greece and its creditors reaching a bailout agreement, the subsequent rebound of the European markets, and the stabilization of the Chinese Yuan, the US has seen a strong response in the strength of the dollar. With both the Yuan and the Euro falling, and speculation as to whether or not the Federal Reserve will raise interest rates next month, the dollar gained in nearly all markets, rising 0.2 per cent against the Japanese Yen following the latter’s economic shrinkage.
Bonds Fall In Response To Upturn
The upturn of the International market led to the 10-year bonds in the US Treasury losing two basis points in their yield, falling to 2.18 per cent. This fall came on the back of similar falls found across Europe as the economic situation improved slightly in the region. The US markets benefited greatly off of the fall of the other International currencies and the rebounds of their markets, but did not do so well at home. With oil prices continuing to fall significantly, the market was only kept stable by increased consumer spending across the board.
Stabilization Only Slight And Temporary
With the current economic situation, and the recent volatility of the International markets, this stabilization is likely to only be temporary. The stabilization of the European market depends almost entirely on the smoothness of the bailout fulfillments, and any tremor could lead to the markets being flung back into uncertainty. Similarly, with China’s stock markets floundering, their hopes are being pinned on the weakened Yuan increasing exports. Similarly, Japan’s economic hopes are resting on the deflated Yen bringing in more exports. Should these markets continue to fall, the US markets could start to see contractions of their own, so it remains to be seen just how long the recent spate of sustainability can last.