Economic growth in the U.S. appears to be outpacing the European recovery as the post-credit freeze correlation between Treasuries and German bunds breaks down, according to Bloomberg. Since the start of December, the yield on 10-year U.S. Treasury notes jumped twice as quickly as similar German debt, after trading at nearly identical levels since April 2007.
Some financial companies are starting to sell U.S. notes and scoop up bunds as the markets decouple, and some analysts are predicting an increase in American interest rates as U.S. gross domestic product increases. The difference in yields hit a peak of 0.49 percent last month, with the gap expected to grow as Treasuries climb to a 4.1 percent yield from 3.83 percent by June 30, while the bund is expected to slip from 3.38 percent to 3.35 percent during that time.
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