Why is the dollar strengthening after J POWs speech yesterday?

Expectations of rate hikes sooner rather than later. What’s puzzling is why that didn’t cause the Treasury sell off to continue today, but it could be as simple as demand for Treasuries exceeding or equaling supply of Treasuries. Macro is always a balancing act between competing factors, and said factors don’t influence all asset classes in the same way.

Pull up a chart of the dollar. It formed a double bottom (W pattern) and started to strengthen well before his speech.

The Fed got a margin call yesterday. On credibility.

Brent Johnson - Dollar Milkshake Theory

LINK

Good stuff for those that haven’t heard of it.

this is exactly what I predicted back in March for the precious metals complex and commodities in general.

The consumer has gorged themselves on durable and non-durable goods for the past 9 months. Why? .... because that's all they could spend money on .... since the Services market (travel, hotels, service industries) was very limited due to to lockdowns.

Now the consumer spending pendulum is swinging back
in favor of services.... naturally.

Goods providers that loaded inventories based on high demand are now going to be overweight, and orders for commodities (metals, lumber, cotton, etc) are drying up ...

as predicted, commodities prices are going to rapidly decline in Q3, before fully recovering in Q4. As more and more services businesses reopen, Services are (and will continue to be) in greater demand.

The problem = when commodities rapidly decline, it typically takes the equities market down with it.

Just my opinion, but now is a good time to store dry powder ... for what is surely to come within the next 18 weeks. No need to be fearful if you are properly prepared. Just my dos centavos ....

I guess they missed the part where Biden and the dems want to push through a 6 trillion dollar "infrastructure" bill using reconciliations so the GOP can't block it.