TSY/Bund Spread Widest in 26 Years

The gap between 10-year government bonds in the U.S. and Germany stood on Thursday at its widest level since at least 1990, as U.S. bonds came under renewed selling pressure.

The election of Donald Trump as the next U.S. president has boosted expectations that his economic policies will lead to higher inflation and interest rates, pushing Treasury yields up.

In contrast, the European Central Bank is expected to maintain an ultra-loose monetary policy to boost subdued inflation in the euro area.

U.S. Treasury yields rose 3 basis points to 2.25 percent , while German Bund yields were down 1 bps at 0.30 percent.

That widened the gap between the two to 195 bps – a level not seen since at least 1990, according to Reuters data.

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell