The German and European markets had a good month. Yields fell on the back of the telegraphed ECB bond buying program. With 60 billion per month starting in March, the bond traders pre-bought in anticipation of the new central bank buyer in town.
In the German market this month, the:
- 10 year bund yields fell from 0.541 to 0.321 or -23.9 basis points
- 5 year yields fell from 0.017 to -0.048 or -6.5 basis points
- 2 year yields fell from -0.098 to -0.184 or -8.6 basis points
As good as the yield moves were in Germany and Europe, the US bond market takes the crown for the month.
For the month, the yield on the US debt saw the following changes:
- 10 year bonds fell from 2.172% to 1.6508 or -52 basis points
- 5 year yields fell from 1.6528 to 1.1676 or -48.5 basis points
- 2 year notes fell from 0.6645 to 0.4567 or -20.8 basis point
This was the largest monthly price change going back to 2011
On a spread basis, the spread between US and German bonds narrowed which helped the US dollar outperformed this month.
Despite the huge fall in yields, there are some – including the newly crowned bond king, Jeffrey Gundlach – who sees the trend continuing in 2015 with the potential for the US 10 year bond yield heading to the modern day low at 1.38% as inflation remains low.
All things being equal if the funds flow to the higher US yields, that should keep the dollar bid.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.