The USD reaction to rising US yields is disappointingly small. This rise does not seem to be completely unaffected by a USD-damaging risk premium. Of course, that does not have to remain the case. It is a snapshot of the current situation.

However, it makes sense. It fits into this image that the mortgage applications in the US have fallen further and have now reached a 28-year low. The housing market is one of the most important channels through which rising interest rates can cause a recession. A standstill on the US property market will significantly impede the flexibility of US employees, thus also dampening growth in addition to the direct effect.

Rising yields seem to confirm our US economists, who continue to expect a US recession. The last of the recession Mohicans it sometimes seems to me. But at present, they seem to be the lonely voices that will be confirmed in the end.