US 2y yield (blue line) vs GER 2y yield (red line)...The spread is immensely wide as the FED has been in a hiking phase wile the ECB still continues to apply a "whatever-it-takes policy".
Eventually the ECB policy will have to roll back and front-end yields will react by backing up.
I believe the German 2y yield will eventually move higher and lead the narrowing of the US-GER 2y spread gap.
This also makes the case for a Eurozone (i.e. German) curve flattener attractive at these levels.
Not
Zerohedge has also just mentioned this as well...thanks to a member who PM me this...its the last chart on their page:
Bloomberg touched on this idea today in their article below ...essentially the idea still holds that compared to US yields, German yields seem too tight and perhaps the ECB will get more hawkish soon tightening the spread between the two countries.
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