Record U.S. Yield Premium Runs Into the Trump-Dollar Discount
- Concerns over Trump fiscal, currency policies hit greenback
- U.S. two-year yields are 3 percentage points over German ones
Why the Yield Curve Inversion May Not Be Too Alarming
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U.S. two-year Treasuries haven’t yielded this much over their German counterparts for decades, yet it’s providing little help for the dollar. The explanation for some is that the interest-rate premium is getting canceled out by a Trump discount.
Longer-dated U.S. Treasury yields have had record premiums over their German equivalents since late 2014, when the Federal Reserve ended its quantitative easing. More recently, the Fed’s ratcheting up of its policy interest rate has propelled shorter-dated Treasury yields, while the European Central Bank has yet to end its own QE. That’s spurred a record gap for two-year yields, according to data compiled by Bloomberg going back to 1990.