While traders have been closely following the push higher in 10Y yields, which rose as high as 2.996 percent on Monday, as well as the dramatic short squeeze in the dollar, they may be ignoring the one asset class that is responsible for both moves: crude oil. Recall, it is the ongoing move higher in crude prices that has sent 10Y breakevens surging to 4 year highs, while expectations of rising inflation have in turn boosted nominal yields as well as sent odds for 4 rate hikes to cycle highs… (Click to enlarge) … translating into a relentless dollar bid, which is creating a feedback loop forcing the record number of dollar shorts to aggressively cover their positions. (Click to enlarge) So how much higher can oil prices rise, before there the adverse feedback loops and unintended consequences swamp out the risk-on sentiment? According to Deutsche Bank’s chief Macro […]