Relative US/European Employment Dynamics Support Treasuries vs Bunds
​Yesterday, French employment data came out strong. This is noteworthy because France is the core of Europe with Germany but has many symptoms of the south. It thus acts as a benchmark for the Eurozone. The job market has improved in the south as well. Spain and Italy have also seen their unemployment rates fall significantly lately. Additionally, the credit channels between US and Europe have diverged as a result of very different nonâ€financial corporate behaviors.
As mentioned recently, we believe that the US job market is now facing strong headwinds.
Consequently, there is a case for a narrowing of the Treasuries/Bund yield spreads...
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