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Expand chart
Data: FactSet; Chart: Axios Visuals

The dollar is buckling under the weight of expected rate cuts from the Fed and record-low U.S. Treasury yields.

The state of play: It has fallen to its weakest level when valued against a group of global currencies since the beginning of the year, and experts think there could be much further to go.

Why it matters: Multinational companies prefer a weak dollar because it makes U.S. exports cheaper overseas, but it also makes imported goods more expensive for American consumers and can push inflation higher.

  • Firms have shown a decreased ability to raise prices over the last decade, so a weaker dollar could instead put pressure on companies' bottom lines, hurting retailers and small businesses already reeling from the U.S.-China trade war and coronavirus outbreak.

What's happening: As Treasury yields sink further into record-low territory the so-called carry trade, in which traders buy dollars to benefit from U.S. yields being higher than in other industrialized countries like the eurozone and Japan, is starting to decline.

  • The Fed's surprise 50 basis point rate cut earlier this week has triggered increased expectations for more cuts, with Fed funds futures pricing U.S. rates about 100 basis points lower than their current level.

Watch this space: Yields on benchmark 10-year U.S. Treasury notes again hit a record low, touching 0.92% on Thursday, less than 160 basis points above comparable German government debt, the European standard.

  • That's the narrowest the spread has been since July 2016. (Yields fell further Friday morning.)

Breaking it down: "There’s a belief that [U.S. and European rates] can converge or get pretty close to convergence pretty quickly because the Fed has suddenly become quite aggressive," Kathy Jones, chief fixed-income strategist at Charles Schwab, tells Axios.

  • Kathy Lien, managing director of FX strategy at BK Asset Management, points out that the European Central Bank and Bank of Japan already hold negative interest rates, "so even if they do move it’ll only be by about 10 basis points, whereas the Fed can cut rates significantly from their current levels."
  • "It's all about the expectations of future policy," Lien said.

Go deeper: Coronavirus doesn't tell the full story behind Dow's plunge

Go deeper

Using apps to prevent deadly police encounters

Illustration: Sarah Grillo/Axios

Mobile phone apps are evolving in ways that can stop rather than simply document deadly police encounters with people of color — including notifying family and lawyers about potential violations in real time.

Why it matters: As states and cities face pressure to reform excessive force policies, apps that monitor police are becoming more interactive, gathering evidence against rogue officers as well as posting social media videos to shame the agencies.

Dan Primack, author of Pro Rata
14 hours ago - Technology

TikTok gets more time (again)

Illustration: Aïda Amer/Axios

The White House is again giving TikTok's Chinese parent company more to satisfy national security concerns, rather than initiating legal action, a source familiar with the situation tells Axios.

The state of play: China's ByteDance had until Friday to resolve issues raised by the Committee on Foreign Investment in the U.S. (CFIUS), which is chaired by Treasury secretary Steve Mnuchin. This was the company's third deadline, with CFIUS having provided two earlier extensions.

Federal judge orders Trump administration to restore DACA

DACA recipients and their supporters rally outside the U.S. Supreme Court on June 18. Photo: Drew Angerer via Getty

A federal judge on Friday ordered the Trump administration to fully restore the Deferred Action for Childhood Arrivals program, giving undocumented immigrants who arrived in the U.S. as children a chance to petition for protection from deportation.

Why it matters: President Trump has sought to undo the Obama-era program since taking office. Friday’s ruling will require Department of Homeland Security officers to begin accepting new applications for DACA as soon as Monday.

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