To give you an example of the strong dollar that the Fed is fighting through its swaps contracts, take a look at gold.

The precious metal is roughly $120 off it high YTD in dollar terms. But gold is up 5% to 10% this year denominated in other curries like the yen, euro, yuan.

The strong dollar is the headwind Janet Yellen and her cohorts are fighting. Not for growth in the economy or anything simple like that, but for the additional costs of paying the debt.

Ideally the Fed would like to see negative nominal interest rates, but the bond vigilantes will not let that occur as they move the  US 10-year note closer 2.5%.

There is close to $5 trillion in debt trading a negative nominal rates in the world, according to the newest market data. Meaning investors are paying the interest on the sovereign debt.

The idea is to make your return on the currency swap instead of note yield. Using dollars to by euro, yen yuan sovereign debt is the carry trade of choice for those chasing yield.

I’ll have more on the strong dollar in the future, but suffice it to say Yellen and Treasury Secretary Jack Lew would like to see King Dollar dethroned.