Answer to Question #315944 in Macroeconomics for APOORV

Question

What is the relationship between the US dollar index, 30 year T bond prices and T bond interest rates? I know bond prices and interest rates are inversely correlated but please explain their relationship with the US dollar.

Answer 1

30 year treasury bonds are government debt securities issued by the US federal government that have maturity of 30years. This gauges the performance of US stock market which reflects the demand for US dollars. Demand for treasury bonds increases when Investors are concerned more on the safety of stock investments. As more investors move away from high risk investment, demand for secured treasury bonds and US dollars increases which in turn pushes their prices higher. This implies a rise in treasury bond is a dollar bullish and a fall in treasury bond is a dollar bearish.