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The U.S. debt curve game "soft landing", gold and the U.S. dollar have reached a new crossroads
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Official Website]: "Soft Landing" of the U.S. Debt Curve Game, Gold and the US Dollar www.xmserving.come to a New Crossroads." Hope this helps you! The original content is as follows:
Most U.S. bond yields fell on Wednesday (November 5), but the long-term showed signs of stabilization. The two-year yield fell 1.4 basis points to 3.570%, the 10-year yield fell 0.6 basis points to 4.085%, and the 30-year yield was flat at 4.671%. At the same time, one-year yields edged higher, pushing the yield curve toward a steeper path. Market trading was light, with investors awaiting the upcoming ADP employment data and ISM services PMI for more directional guidance. In addition, the refinancing plan to be announced by the U.S. Treasury Department has also received attention, but the market expects its content to be in line with convention. In the foreign exchange market, the U.S. dollar index fell slightly by 0.04% to 100.1644; while spot gold bucked the trend and rose by 0.84% to US$3,964.76 per ounce, showing the flow of safe-haven funds between bonds and gold.
A subtle shift in the shape of the curve: the strengthening of soft landing expectations
The changes in the U.S. bond yield curve clearly reflect the market’s stratified expectations for the U.S. economy. The slight rise in one-year yields www.xmserving.comes as recent employment and inflation data show resilience, giving traders confidence that the Federal Reserve will not be in a hurry to cut interest rates in the short term and that the economy has avoided the immediate risk of a hard landing. The decline in yields with maturities of two years and above indicates that investors are more cautious about the medium-term outlook: Although short-term economic momentum is solid, the growth path between two and ten years is likely to slow down, while inflationary pressures are expected to gradually subside.
This expectation is supported by solid fundamentals. The Federal Reserve maintains high interest rates, effectively anchoring short-term yields; at the same time, the continued repair of global supply chains and the stabilization of the geopolitical situation have also alleviated the tail risks of long-term inflation.. Some institutions point out that the current curve shape is similar to the adjustment stage in mid-2024, when the market also formed a "soft landing" consensus amid the data tug-of-war. Next, key macro data will become the decisive factor: if the ADP employment data is stronger than expected, it will consolidate short-term economic resilience; conversely, if the ISM service industry PMI falls below the 50 boom-and-bust line, it will intensify concerns about the mid- to long-term economy and may further steepen the curve. Although there are no surprises in the Ministry of Finance's refinancing announcement, its size and maturity structure will still affect the market's judgment on debt sustainability. If it favors long-term bond issuance, it may trigger vigilance about future supply pressure.
The convergence perspective of technical signals: directional hints are gradually emerging
From a technical perspective, the trends of U.S. debt, the U.S. dollar and gold jointly construct a coherent market narrative.
The U.S. dollar index is hovering near the middle track of the Bollinger Bands at 99.93 on the 240-minute chart. There is a slight divergence in the MACD indicator, but the RSI rises to 67.20, indicating that although the short-term momentum has slowed down, the overall trend is still in a sideways consolidation pattern, and the upper track resistance of 100.32 has not yet been effectively tested. This echoes the firmness in short-term U.S. bond yields.
In terms of spot gold, its 240-minute chart shows that the price is below the middle track of the Bollinger Bands at 3985.55. MACD is still in negative territory, but RSI has fallen back to 44.40, close to the edge of oversold, suggesting that rebound momentum is building. If the gold price can hold on to the lower track support of 3930.85, it may test the upper track of 4040 upwards. This technical trend is consistent with the downward logic of medium- and long-term U.S. bond yields, showing that safe-haven funds are flowing into the bond and gold markets at the same time.
Taken together, technical indicators and fundamental expectations confirm each other and jointly point to the continuation of the steepening process of the curve.
The spillover effect of expected changes: the linkage logic of gold and the US dollar
The impact of the "soft landing" expectations heralded by the U.S. debt curve has spread to the foreign exchange and www.xmserving.commodity markets.
The steepening curve of the bull market has strengthened the pricing of future interest rate cuts by the Federal Reserve, which may weaken the U.S. dollar’s interest rate advantage, causing the U.S. dollar index to www.xmserving.come under pressure near the 100 mark. On the contrary, it is good for non-interest-bearing assets such as gold. The decline in yields in the middle of the curve means that the real interest rate implied by the market is lower and increases the safe-haven appeal of gold. The current gold price stands at US$3,964, which already includes this premium.
However, the strength of this linkage depends on the confirmation of future data. For example, if the ISM service PMI declines unexpectedly, it will intensify concerns about an economic slowdown, which may simultaneously push up gold and suppress the dollar; if the data is strong, it will have the opposite effect. Some analysts pointed out that this pattern has appeared many times during the curve repair period in history: gold is usually the first to reflect mid- and long-term expectations, while the US dollar is more disturbed by short-term data. Generally speaking, the current environment is more conducive to gold looking for opportunities in safe haven and inflation hedging needs, while the US dollar faces the risk of falling back from high levels.
Looking ahead: QuPotential paths for line evolution
Looking ahead to the market outlook, the U.S. bond yield curve is expected to maintain a steepening bull market pattern. Downward pressure on medium- and long-term yields may be released with the release of data, while the upside of one-year yields is limited by the Fed's hawkish stance.
If the ADP and ISM data are in line with consensus expectations, the slope of the curve will remain stable and market focus will turn to the details of the refinancing plan. Any unexpected data could amplify the steepness of the curve and drive up market volatility. In the long term, as the December FOMC meeting approaches, this curve shape may pave the way for future interest rate cutting cycles, and the "soft landing" narrative will continue to dominate the market. In this process, the linkage between the U.S. dollar and gold will become clearer: the U.S. dollar may weaken amid shocks, while gold will rely on safe-haven easterly winds to accumulate upward momentum.
The above content is all about "[XM Foreign Exchange Official Website]: U.S. Debt Curve Game "Soft Landing", Gold and the US Dollar www.xmserving.come to a New Crossroad". It was carefully www.xmserving.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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