http://www.bloomberg.com/news/2014-08-26/treasury-two-year-notes-yield-most-versus-germany-since-2007.html
Treasury two-year notes yielded the most versus similar-maturity German debt since 2007 as money managers prepared to bid at a $29 billion sale of the U.S. securities today.
Investors demanded 52 basis points more to own 2016 securities in the U.S. instead of Germany today, after pushing the rate on the German debt down to minus 0.046 percent yesterday. Bond yields from Finland to Italy dropped to records today. The markets are diverging as the U.S. shows signs of growth and the Federal Reserve moves closer to raising interest rates, while European Central Bank policy makers consider bond purchases to boost economic expansion.
“Given the divergence in economic and policy paths between the U.S. and Europe, it is not unreasonable to expect the two-year yield spread to widen further by 30 to 40 basis points in the next nine months,” Jussi Hiljanen, head of fixed-income research at SEB AB in Stockholm. “The U.S. economic recovery is gathering pace while a decline in inflation in the euro area remains a concern.”
The Treasury two-year yield was little changed at 0.5 percent as of 7:07 a.m. in New York, according to Bloomberg Bond Trader data. The price of the 0.5 percent note due in July 2016 was 100. Benchmark 10-year securities yielded 2.38 percent.
= new reply since forum marked as read