The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
The key reason why we saw a strong move in bond yields and the USD was due to the upgrade to the Fed fund projections. The market was pricing in 65 basis points of hikes by the end of 2015, however the Fed went above expectations by saying the funds rate would be 1% by 2015.
This is a big development and highlights that the Fed is likely to be more aggressive with hikes. I have closed this trade idea as the price action could become much more bullish from here.
Whether this changes the dynamics of the USD is up for debate, but it does feed into my view that the USD will be the currency to be leveraged to over the next couple of years.