Ebury's chief FX strategist said stepped-up US Treasury repurchase operations
could exert a more persistent effect on the dollar than on yields. The buybacks
were not intended to fix the deficit; market concern over why the Treasury feels
compelled to use unconventional intervention has itself become a source of risk
premium. That undercuts the usual logic that higher yields attract capital and
bolster a currency—despite rising yields the dollar has weakened as investors
increasingly view the operations as a sign of fiscal and institutional strain
rather than economic strength.
