Forget "the 1%-ers", meet the 3%-ers. As US Treasuries sell-off and European bonds continues to surge, the 3% handle on government debt is becoming a crowded trade with the following six nations now yielding between 3 and 4%... US, UK, Ireland, Israel, and drum roll please... Italy and Spain!
- US 3.008%
- UK 3.044%
- Ireland 3.389%
- Israel 3.70%
- Italy 3.98%
- Spain 3.99%
Bear in mind that a year ago the spread between Spain and US was 350bps and is now less than 100bps...in some wierd world that all makes sense, we are sure.
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Note today saw European stocks selling off (apart from Greece which roared 4% higher) but European bonds screamed lower in yield with Portuguese spreads 30bps tighter today alone and Spain and Italy 18bps tighter!! This is a perfect echo of 2013's first day ramp (and the biggest spread compression since 1/2/13!!)
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Everyone front-running ECB QE?
Chart: Bloomberg