The Dollar Index saw a decline of 0.6% in early-week trading, which coincided with a 10 basis point drop in the US 10-year yield from its previous Friday level. This decline in the dollar is believed to be due to concerns about the sustainability of U.S. fiscal debt, which was highlighted in the Federal Reserve's latest semi-annual report on financial stability.

Additionally, market sentiment is being affected by escalating tensions in the Middle East and political uncertainty. The bond market reacted positively to the recent appointment of a new candidate, who performed better than more radical contenders such as former Federal Reserve member Kevin Warsh and Trump transition co-chair Howard Lutnick, who had support from notable figures like Elon Musk.

Market analysts are cautious, as the long-term impact of this appointment on the dollar and interest rates is uncertain, especially since details about future U.S. trade policy are still pending.