Treasuries' Premium Over Bunds Jumps Before ECB as Fed Odds Rise
- U.S. yield spread over Germany widens to 1.7 percentage points
- Oil rebound has fanned speculation Fed can raise rates in 2016
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The yield premium offered by Treasury notes over German sovereign debt swung to the highest this month as a rebound in oil this week bolstered bets the Federal Reserve will raise interest rates this year.
The spread between the benchmark U.S. 10-year note yield and that of equivalent bunds widened to as much as 1.7 percentage points Wednesday, the most since March 29, amid speculation European Central Bank President Mario Draghi will signal the potential for further easing when policy makers gather Thursday. The probability implied by fed funds futures of tighter U.S. policy this year has jumped to 62 percent from 49 percent at the start of this week.