What’s Wrong With the Dollar?

The ongoing turmoil in the Middle East has produced decisive moves in some markets. Obviously, oil is running up:

And gold, the traditional safe haven has also spiked:

But what about that other safe haven, the dollar?

And what about Treasuries? If nothing else the big rise in oil prices should provide some bid to Treasuries as it raises the possibility of recession. Like the dollar, Treasury yields have fallen (prices rose) in every other recent crisis. This time? Not so much:

Every other crisis of the last three years has produced a rise in the dollar and a fall in Treasury yields as global investors seek a safe haven. Why not this time? Has the perception of the dollar and US Treasuries as a safe haven changed? Or are other factors at work in the gold market? Or is the Middle East turmoil not considered serious enough to warrant buying dollars and Treasuries?

I don’t know why there isn’t more of a flight to safety bid for the US dollar and Treasuries but if the perception of the dollar as a safe haven has changed for the worse, that is a significant development.

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