One thing you might want to note is that 2Y yields hit their highest level (intraday) since 2009 on Wednesday.
As Bloomberg writes, “the two-year yield climbed as much as 4.4 basis points to 1.304 percent, reaching the highest on an intraday basis since 2009, after eclipsing its 2016 high of 1.30 percent.” Yields hit 1.30 in December after the Fed raised median FF forecasts.
Meanwhile, recall that Schatz recently plumbed new (negative) lows on safe haven flows tied to the French elections.
This makes for a rather amusing discrepancy and certainly should lend credence to the structurally strong USD story…
When you think about that, also ask yourself how sustainable rock bottom Schatz and bund yields are when you consider the following numbers, out on Wednesday:
German inflation accelerated further in February, reaching its highest level in four-and-a-half years and surpassing the European Central Bank’s price stability target of just under 2 percent, preliminary data showed on Wednesday.
German consumer prices, harmonized to compare with other European countries (HICP), rose by 2.2 percent on the year after an increase of 1.9 percent in January, the Federal Statistics Office said.
This was the highest annual inflation rate since August 2012 and came in slightly stronger than a Reuters consensus forecast of 2.1 percent.
What say you Jens?…
- WEIDMANN SEES 2017 INFLATION WELL IN EXCESS OF CURRENT FORECAST