ING: “Bessent Put” Supports Risk Assets and Weighs on the Dollar - FJElite

The US Treasury’s decision to increase long-end buybacks has been welcomed as a sign that officials are becoming more willing to lean against disorderly rises in longer-dated yields. The move does not solve the underlying fiscal problem, but it reduces one of the main threats to risk assets and has helped pull long yields lower, lift equities and weaken the dollar, particularly against higher-beta currencies.

The July FOMC minutes also failed to deliver a strongly hawkish message, with short-dated yields falling after the release. That combination leaves markets in a more “risk-on, dollar-off” environment, supportive of carry trades and EMFX. If risk assets extend the move, the dollar could continue to drift lower.