Surging U.S. real yields are aiding the dollar's rebound, rewarding bullish investors while making bears think twice before betting against the buck.
The real yield on U.S. 10-year Treasuries - which measure how much investors stand to make on U.S. government bonds after inflation is stripped out - hit 2.47% on Tuesday, the highest in nearly 15 years, according to data from the U.S. Treasury Department.
At the same time, climbing real yields make it more expensive to bet against the dollar. Bearish investors establishing short positions must pay more to borrow the currency. "The dollar isn't just the nicest house in a bad neighborhood right now, it's the only game in town," said Karl Schamotta, chief market strategist at Corpay in Toronto. With real yields pushing higher, "only the bravest of traders are willing to bet against the greenback," he said.
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