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The spread between the US and German two-year government bond yields is seen at 282 basis points at press time, the lowest level since March 2018.  

The spread has narrowed more than 70 basis points in the EUR-positive manner since early November. Interestingly, investors first began turning up the heat on the Fed to dial back rate hikes in November.  

The yield on the two-year bonds tends to track short-term interest rate expectations more closely than the longer duration bond yields, which are more sensitive to haven demand.  

US-German two-year yield spread