In a matter of days since the election, the dollar has gained in excess of a full baht. 

As of this posting, it had climbed to 34.87. When I last changed currency day before election, I got 33.54.

This is the result of the increase in the interest rate on the US 10-year bond (4.429% as of this posting). 

The pricing action reflects the sentiment among bond traders that Trump’s policies will increase inflation as the prospect of tariffs on imported goods will become reality and tax cuts will add to the national debt.

Even the Fed’s recent quarter-point reduction wasn’t enough to persuade bond traders otherwise,

Surely the prospect of increased inflation due to tariffs should make a the dollar weaker relative to other countries currencies?

The mysteries of high finance....

6 hours ago, forrestreid said:

Surely the prospect of increased inflation due to tariffs should make a the dollar weaker relative to other countries currencies?

The mysteries of high finance....

Here’s an attempt to demystify the bond market.

First, traders dismiss politics and are focused on fundamentals: interest rates, duration, quality rating and price.

As the interest rate rises, the price of a bond falls. In other words, you can purchase a higher-yielding instrument for less. The opposite also holds: when interest rate falls (due to what traders believe is fair value), this results in a higher offering price in the secondary market.

Simply put, people want to own bonds paying a higher rate of return. And the currency of the country where the bond is traded in turn affects demand for that currency.

And bond prices, like equity prices, change by the second as do cross currency exchange rates.

What’s at work here are two motivating factors: greed and fear. The same that drive the stock market. Without both you couldn’t have a market.