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1Fix the driver behind crashes, sound loss and screen glitches2Clear out junk files and repair common Windows errors3Scan for outdated or missing drivers - takes under a minuteOn November 6, 2024, the dollar and longer-term Treasury yields jumped as investors reassessed the outlook for tariffs, fiscal policy, inflation and Federal Reserve rate cuts after Donald Trump won the presidential election. The election was an important catalyst, but it was not the only reason markets moved: resilient U.S. growth, labor-market strength and slower-than-expected disinflation also supported the dollar and yields.
What happened to the dollar and 10-year Treasury yield?
In the morning of November 6, Forbes reported that the U.S. Dollar Index (DXY) had gained 1.8% to about 105.30 around 8 a.m. Eastern time, its highest level since early July. The 10-year Treasury yield was up 16 basis points to nearly 4.5%, a four-month high and its largest daily jump since April, according to the same report. A basis point is one-hundredth of a percentage point.
Those figures describe an immediate market reaction, not a full-quarter result. Over the entire fourth quarter of 2024, the Federal Reserve Bank of New York reported that its broad trade-weighted dollar index rose 6.6%, the largest quarterly appreciation since the first quarter of 2020. In that quarter, the dollar rose 7.5% against the euro and 9.5% against the Japanese yen. These are different currency measures and time periods: DXY’s November 6 reading should not be treated as the New York Fed’s broader quarterly index.
Why did the dollar rise after Trump won?
Currency markets respond to expectations about future economic conditions and policy, not just policies already in force. Investors considered how the incoming administration’s agenda might affect inflation, growth, government borrowing and the Federal Reserve’s decisions. The New York Fed’s review of the quarter points to several forces behind the dollar’s appreciation, rather than attributing the entire move to the election.
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Tariff expectations and inflation
Investors viewed prospective tariffs as a possible source of higher import costs and inflation. If markets expect inflation to remain elevated, they may also expect the Fed to reduce interest rates more slowly. That prospect can make dollar-denominated assets relatively attractive and support the currency. This is a market interpretation of possible policy effects, not evidence that tariffs had already been implemented or that the inflation outcome was certain.
Expected fiscal expansion
Expectations of expansionary fiscal policy can raise questions about future deficits, Treasury borrowing and inflation. New York Fed contacts cited tariff and fiscal policies as possible sources of dollar support. Reuters’ contemporaneous account also connected tariff expectations with investor concerns about inflation and deficits. These concerns formed part of the market reaction; they do not establish that any one policy expectation caused the whole currency move.
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U.S. economic strength and the Fed outlook
The dollar also benefited from U.S. growth outperforming other economies, resilient labor-market data and less progress on disinflation than investors had expected. The New York Fed said market participants interpreted Fed communications as less accommodative than expected and revised the anticipated path of policy upward. In other words, investors came to expect a less rapid easing path, which can support a currency by improving the relative return outlook for assets denominated in it.
Why did Treasury yields go up after the election?
Bond prices and yields generally move in opposite directions: when investors sell existing fixed-rate bonds, their prices fall and their yields rise. On November 6, coverage described a selloff in longer-dated Treasuries amid concerns about prospective tariffs, deficits and inflation. Investors may demand more compensation for the risk that inflation erodes fixed payments or that heavier borrowing increases the supply of government debt.
Expectations for fewer Fed rate cuts can also push longer-term Treasury yields higher. But the 10-year yield is a market price, not a rate directly set by the Fed. It reflects investors’ views about factors including future inflation, growth, borrowing and the path of monetary policy.
Did the Fed raise rates after the election?
No. On November 7, the day after the sharp market reaction, the Fed cut its policy rate by 25 basis points. Chair Jerome Powell said, “in the near term, the election will have no effects on our (interest rate) decisions,” according to the Associated Press.
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There is no contradiction between that cut and rising Treasury yields. The Fed sets a short-term policy rate, while investors trade Treasury securities and price in expectations about longer-run inflation, growth, government borrowing and future policy. The Fed can lower its current rate while markets mark up longer-term yields.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to interpret the headline figures
| Measure | Reported change | What it covers |
|---|---|---|
| DXY | Up 1.8% to about 105.30 around 8 a.m. Eastern on November 6, 2024 | Forbes reported the index reached its highest level since early July. This is an immediate-session snapshot. |
| 10-year Treasury yield | Up 16 basis points to nearly 4.5% on November 6, 2024 | Forbes reported a four-month high and the largest daily jump since April. This is a market yield, not the Fed’s policy rate. |
| New York Fed broad trade-weighted dollar index | Up 6.6% in Q4 2024 | The New York Fed said this was the largest quarterly appreciation since Q1 2020. The index and measurement window differ from DXY’s November 6 snapshot. |
| Dollar against the euro and yen | Up 7.5% against the euro and 9.5% against the Japanese yen in Q4 2024 | Quarterly exchange-rate changes reported by the New York Fed. |
Treasury’s published constant-maturity rates also require careful interpretation. They are par-curve values derived by interpolating the Treasury yield curve from indicative bid-side market quotations, rather than records of a single trade in one specific bond. When quoting a Treasury yield, specify the date and series instead of treating a daily figure as a transaction price.
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What the market move does—and does not—show
- It shows that investors repriced the dollar and Treasury securities in response to the election and their expectations about the economic and policy outlook.
- It does not show that the election alone caused all of the dollar’s subsequent fourth-quarter rise; the New York Fed also identified U.S. economic outperformance, labor-market strength, slower disinflation and Fed communications.
- It does not mean the Fed raised its policy rate. The Fed cut by a quarter point on November 7, while Treasury yields reflected market expectations across a longer horizon.
- It does not establish that expected tariffs or fiscal policies would necessarily produce the inflation, deficit or borrowing outcomes investors considered.
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