UST yields have rebounded over the past few weeks, although the greater increase at the long-end of the curve suggests that this reflects a rise in the term premium as much as an increase in rate expectations.
Furthermore, US and UK yields have now broken decisively away from euro-zone yields.
Capital Economics notes in a report on Wednesday:
- We anticipate an even more marked divergence over the next few years, as the Fed returns US policy to normality, while deep-rooted economic and financial problems in the euro area keep yields there low.
