Towards a widening of the US-Europe yield spreads

Editorial Whereas last week the ECB strengthened its stance by committing to a significant increase in its bond purchases this quarter, the Fed decided to wait and see, refusing to act preventively. These different positions will not facilitate the ECB’s task and will continue to fuel the underperformance of US Treasuries against European sovereign bonds, especially if the health situation in Europe continues to deteriorate. The 10Y UST-Bund spread, which is nearing the 200bp threshold, will therefore probably widen a little more in the coming weeks, a rise that will probably not be linear since the bear market in the United States on bonds will probably be accompanied by greater volatility on risky assets, particularly as the 10Y UST rate approaches the 2% threshold.