November 13, 2024 11:24 GMT
BONDS: U.S./Germany 10-Year Yield Spread Consolidates Above 200bp
BONDS
U.S./Germany 10-Year yield spread ~2.5bp tighter at 204bp today.
- The spread closed at fresh multi-month highs on Tuesday (206.7bp)
- Trump-driven inflation risk vs. related European growth headwinds have driven much of the recent widening.
- The spread is ~55bp wider since the mid-September closing low.
- Most sell-side names that we read have flagged the risk of further widening.
- German fiscal and political conditions add a further layer of complexity over the coming months, with the CDU currently expected to lead the next government after the February election.
- The ’23 high (212.69bp) and the ’24 high (218.31bp) present the next upside areas of interest.
- Zooming out, the initial Trump Presidency peak comes in at 279.59bp, although there are various levels of interest between there and the 23/24 peaks flagged above.
Fig. 1: U.S./German 10-Year Yield Spread
Source: MNI - Market News/Bloomberg
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