Forex · Forex Flash The Great Realignment

Key arguments

• The bond market is driving the currency market, with the surge in US yields reasserting dollar dominance.
• The UST sell-off is driven by both real yield repricing of Fed hikes and a rising term premium from inflation, QT, and fiscal deficits.
• The euro is under pressure from French fiscal concerns, soaring Bund yields, and ECB commentary, despite a brief rally attempt.
• The Swiss franc is the ultimate safe haven, with EUR/CHF carry unwind signaling risk aversion.

Corresponding source evidence

1. Forex Flash Forex The information in this document is current as at 2 October 2026 (unless otherwise stated) See the Appendix for analyst accreditation and important notices The Great Realignment  The global foreign exchange market is undergoing a period of profound restructuring, driven by the most severe bond sell-off in decades. · October 2026
2.  The intensity of the current UST sell-off suggests that the rise in the term premium may be due to a sharp rise in inflation, greater uncertainty over the Fed’s moves, the shift from QE to QT, and the rise in the public deficit.
3.  Next week, the market will digest the US employment report, US Treasury auctions, a packed schedule of speeches by Federal Reserve officials, and the reopening of Chinese markets following the Golden Week holiday. · next week