1. What does the current rise in interest rates on both the US dollar and US debt reflect?

Recently, interest rates on US debt have risen rapidly, and the dollar has hit a new high.The simultaneous strengthening of the two should be paid more attention to, and the macro and liquidity environment reflected are the main constraints and even challenges for all kinds of assets.. The simultaneous stages in history have several commonalities: 1) the cycle of raising interest rates; 2) tightening of domestic financial conditions; and 3) tightening of overseas dollar liquidity.

But the reverse is not true: first, the Fed raises interest rates, if emerging growth is strong, the dollar can still weaken (2017); second, the US tightening growth weakens, and it is difficult for interest rates to continue to strengthen; or in the event of a liquidity crisis, the Fed can turn to easing (2020).And because of that,seventyIt is rare to see the synchronous strengthening stage of the two since the 1990's.. But neither of these two situations is available for the time being. On the one hand, there are more short-term problems with other non-US growth against the dollar; second, restrictions on interest rates and inflation limit the Fed's policy space.

Second, historical experience: large-scale weakness, especially gold, developed is usually better than emerging; focus on liquidity shocks in extreme cases

If interest rates on US dollars and US Treasuries persist or enter more extreme situations, we need to observe liquidity shocks. Observe several experiences since the 1970s: 1) crude oil, industrial metals, agricultural products and other commodities have performed poorly, especially gold, the logic behind which lies in sluggish demand and tighter financial conditions; 2) the stock market has performed moderately, falling more than rising less, emerging backwardness, which is also due to the strengthening of the dollar.

Third, the potential impact of rising interest rates on both the US dollar and US Treasuries?

1) Financial conditions in the United States have tightened, curbing demand. 2) restrain the export. 3) suppress commodity performance. 4) influence multinational corporations with high overseas income exposure. 5) the market with a relatively high proportion of foreign debt in US dollars is under pressure. 6) increase the cost of financing in US dollars, creating a double squeeze on emerging markets in the context of high commodity prices.

Fourth, the possible policy outlet and evolution in the follow-up: the inflationary inflection point alleviates the interest rate pressure; China's steady growth relieves the pressure on the dollar.

For the moment, the focus is on whether the "impossible triangle" of austerity, inflation and growth can take a turn for the better, while the corresponding observation is whether interest rates on US bonds and the dollar can slow or even fall. A rapid decline in inflation or a renewed improvement in non-US growth can partially alleviate or even resolve the current contradiction. Otherwise, the market will still be under pressure, leaving people "nowhere to hide".