USD: Yield Spared Between German Bunds And US Treasury Points To Further USD Gains – MUFG

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What is the outlook for the US dollar in the near-term?

Here is their view, courtesy of eFXdata:

MUFG Research sees a scope for further USD gains on the back of long-term yield spread.

The long-term yield spread between German Bunds and US Treasuries continues to widen, reaching 175 basis points. The spread is moving back closer to pre-pandemic levels from February when it was trading closer to 200 basis points and is now well above levels from during last summer when it was trading between 100 and 120 basis points,” MUFG notes.

The Fed’s greater tolerance for allowing higher yields than the ECB’s could be contributing to the widening yield spread in the near-term. In contrast, the ECB has clearly expressed more concern over rising European yields. The developments are offering more support for the US dollar in the near-term,” MUFG adds.

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Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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