Courtesy of Mish.
Saxo Bank chief economist Steen Jakobsen point out US 10-Year treasury is the cheapest in G7 with the spread near a record high.
Spread of US 10-Year Note Yield vs. G7 Average Yield
click on chart for sharper image
Via email Steen says …
US 10 Year cheapest in G-7! This is one of the reasons for my change to US fixed income and short US Dollar.
US 10 Year spread vs. G-7 equivalent now at 79 bps – close to all time high. As the chart indicates there is considerable mean-reversion in this data series.
The market is long, very long the US dollar into ECB and FOMC meetings where consensus quietly is looking for 10 bps cut by the ECB, maybe even announcement of “private” ABS [Asset Backed Securities]. In the US the regional banks want the discount rate normalized, but reality is close by.
I remain long US fixed income – and will add on any sell off. Long investors could use IEF.
IEF
IEF is the Barclays 7-10 Year Duration Bond Fund.
$TNX…
