US-German Bond Spreads And Equity Leadership

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US-German Bond Spreads And Equity Leadership

Recent weak data emanating from the Eurozone has been weighing on German Bund yields. The significant drop in the Eurozone Citigroup Economic Surprise Index (CESI) has pressured German Bund yields lower. Looking through the structural decline in German yields, we can see that short-term, cyclical moves are driven by economic activity. As the CESI has tumbled from 92 to -88 over the last five months, German yields have retreated about 25bps, from 75bps to 50bps.

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