By: Gustian Farrow, Head of StoneX TV • Content Channels
Global rate paths are moving apart, and Vincent Deluard, Director of Global Macro Strategy at StoneX, sets out what those differences signal for currencies, bonds and growth.
See our financial videos hubDeluard points out that the Fed, BoE and RBA keep “relatively high rates compared to the ECB and the BOJ” and sees it reflecting “somewhat diverging economic paths” between the US and eurozone. Inflation is near target in Europe, allowing cuts, while the US jobs and consumption data keep the Fed on hold.
“We got into the year, worrying about a US recession… a lot of these fears are receding”. As real-time indicators such as tax receipts and restaurant bookings stay firm, the market lifts near-term rate expectations. Deluard notes Jay Powell even sketched a scenario of no 2025 cuts, suggesting the repricing cycle “is not fully over.”
Beyond policy, a pending debt-ceiling deal matters: “We will have to issue close to half a trillion debt” once an agreement lands. Investors are asking “at what point of the curve” and “who’s going to buy it,” pushing yields higher even at longer maturities.
Stronger US growth translates to “a high currency on higher bond yields”. Yet Deluard cautions against declaring a regime shift: “We came into the year with a massively overvalued dollar… there is still room for the weak-dollar trade to go”. Institutional rebalancing and capital repatriation could continue to pressure the greenback.
Asked if dollar supremacy could fade, Deluard replies philosophically: “Yes, at some point, we all die”. Over decades, the dollar’s share may ease, but its role in trade invoicing and reserves endures. A “strong dollar” in his definition is not one that rises endlessly, but one the world still uses—allowing natural ebbs such as past 50% declines without breaking the system.
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--- Written by Gus Farrow
--- Expert: Vincent Deluard, StoneX Director of Global Market Strategy
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