US Yield Curve Falls to Flattest in Over Three Years Against UK Counterpart

Source: Bloomberg

The US yield curve was the flattest in over three years versus its counterpart in the United Kingdom, with the Federal Reserve adopting a more hawkish stance than in its British counterpart. QQQ is up 0.09%, while EWU is up 0.27%.

• Yields on the 10-year bonds in the United Kingdom grew by 10 basis points, stretching the gap with the two-year bonds to 31 basis points.
• The latest British yields compare to the equivalent spread in the United States, which recorded a gap of 22 basis points.
• The development comes as the Bank of England hiked its key rate in the past week, adopting a softer stance on future tightening as it cited risks to the economy.
• Meanwhile, the Federal Reserve is expected to increase its rates to 1.75% to 2% by the end of the year as the country seeks to slow down inflation.
• Strategists believe it may be time to differentiate the two central banks, as the Bank of England’s dovish stance will likely reflect in Europe.