Bond buyers certainly had a good month with the US outperforming via ForexLive

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.

US and German bond yields had great months, but US bonds did better.

posted via ForexLive