The bond market chills while the dollar swoons
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The bond market just saw its best month since February, while the U.S. dollar had its longest monthly slide since 2017.
Why it matters: After a "tariff tantrum" sell-off, bonds are cool to buy again, making it look like the pushback on American policy has moved to the dollar.
Zoom out: Stocks and bonds are both getting bought by investors right now, which is atypical. Stocks are usually higher risk, and bonds are safe.
- If both are getting bought while the dollar is down, the greenback may be taking the brunt of the investor rebellion against U.S. assets.
By the numbers: The U.S. dollar is down over 10% year to date.
- Conversely, U.S. government bonds had their best first half in five years to kick off 2025, while stocks hit their fifth record high for 2025 on Monday.
What they're saying: It's not that bond investors have nothing to worry about.
- "The volatility has died down a little bit, compared to where it was, but other than that, it's more just a calm between the storms," according to Kathy Jones, chief fixed income strategist at Charles Schwab.
Reality check: There are some, particularly in the Trump administration, who are fine with a weaker dollar.
- White House economist Steve Miran said in April that "our financial dominance comes at a cost."
What we're watching: The "big, beautiful bill" would increase the deficit. Typically that would push up bond yields on the longer end of the curve.
- That's not happening, indicating bond investors are cool with the deficit, at least for now.
