US 10-Year Is Showing Relative Strength

US 10-Year Is Showing Relative Strength

- Interest rates are exceptionally important to markets and their direction.

- Capital tends to be attracted to the highest yielding market, especially if it is rising faster on a relative basis to other yields.

- The black line above shows the US 10yr.

- It has been rising steadily through most of 2018.

- The red line shows the spread between the US 10yr and the German bund and the blue line shows the spread between the US 10yr and British gilt.

- These 2 lines show that the respective spreads favours the US 10yr and this is a major reason for the USD's appreciation of late. 

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