Despite the meaningful spike in US Treasury yields, cyclical currencies remain fairly stable and recorded gains vs USD. As long as the rise in UST yields and the curve steepening is driven by ‘’good’’ economic factors and the perception that the Federal Reserve remains behind the curve (tolerating the CPI overshoot), the rise in yields is not detrimental for risk assets and doesn’t benefit USD. It is predominantly the rise in yields caused by quantitative easing tapering expectations that would be more detrimental for cyclical assets and FX. The inflation/ growth driven rise in UST yields should keep USD on the back ... (full story)