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Marked divergence in US and UK yields from euro-zone likely over the next few years

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. Furthermor…

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Marked divergence in US and UK yields from euro-zone likely over the next few years
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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. 

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