US Treasuries Drop Versus G7

Treasuries fell to the least expensive level versus their Group of Seven peers in four years before data this week that economists said will show improvement in the U.S. labor market and consumer confidence.

The extra yield that 10-year Treasuries offer over their G-7 counterparts reached 72 basis points, the most since April 2010, after European Central Bank policy makers last week unveiled an unprecedented stimulus package. Spain’s 10-year yield dropped below the U.S. for the first time since 2010. The U.S. is scheduled to sell $62 billion in notes and bonds over three days starting tomorrow.

“Yields are certainly too low in Treasuries and any upwards move that we see is a realignment towards fundamentals,” said Orlando Green, a fixed-income strategist at Credit Agricole SA’s corporate and investment banking unit in London. The market “can now focus a bit more on the U.S. internal dynamics and how its recovery is coming along.”

The U.S. 10-year yield climbed two basis points, or 0.02 percentage point, to 2.61 percent at 8:37 a.m. New York time, according to Bloomberg Bond Trader prices. The 2.5 percent note due in May 2024 fell 6/32, or $1.88 per $1,000 face amount, to 99 1/32.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza