When Correlations Break | The Dollar’s Divergence from Treasury Yields Exposes Deeper Risks

The traditional link between US Treasury yields and the dollar has broken down, with higher yields now coinciding with a weaker dollar. This shift is driven by investor concerns about US fiscal discipline and policy uncertainty. Historically, rising yields signaled confidence in the US economy, boosting the dollar as a safe haven. Now, policy volatility and growing credit risks have disrupted that pattern, forcing investors to rethink hedging strategies and driving interest in alternatives like the euro, yen, Swiss franc, and gold.

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