Choose an observation, then compare explanations and the evidence each would need. These are hypotheses to investigate, not diagnoses of current markets.
US rate expectations may have shifted relative to the other economy.
Compare dated expectations on both sides; a change in only one current rate is insufficient.
If the relative expected path did not change, look for another explanation.
Demand for dollar liquidity or changes in risk exposure may contribute.
Look for contemporaneous funding conditions and broader cross-asset evidence.
A dollar move by itself does not demonstrate a funding shortage.
Participants may have reduced earlier positions after an event.
Seek dated positioning and flow evidence, and identify the market covered.
An appealing positioning story without supporting observations remains a hypothesis.
The order does not express probability or importance. Several mechanisms can operate together; available evidence may not distinguish them.
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