Bond participants make their move, USDOLLAR drops
Bond market participants have made their move. Given the decimation of bond prices for 2022, value investors were bound to come in at some stage. It looks as if today is that day.
The top chart shows IEF - iShares 7-10 Bond ETF. The price gapped open today. As a result, real rates, which are inversely related to the price of bonds, have dropped. As a ripple effect, FXCM's USDOLLAR basket, which has a positive correlation with the real rate, is also declining.
It will be interesting to see if the bond rally has legs. We have previously noted that the real rate was overbought and due for a correction. This scenario now seems to be playing out.
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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