Mind the gap: US and German Treasury yields

When the relationship between two well-observed and liquid variables in the bond markets reaches multi-year wides, it warrants attention.

The gap between US and German Treasury yields is now at the widest levels observed this century and even before, and back to the wides following President Trump's election victory in 2016.  US Treasury yield curve flattens to lowest level since financial crash Given such a differential, European investors might be expected to seek out the extra yield offered by the US market. However, the decision on whether or when to do so is not as easy as it might appear, and a variety of factors must be considered, including currency hedging costs, the shape of European yield curves and diverg...