The U.S. 10-year Treasury yield of 2.62% is 72 basis points higher than that of the G-7 average, the largest spread since April 2010, according to Bloomberg.
Earlier this morning, the yield on Spanish 10-year paper fell below that of Treasurys, also for the first time since 2010.
Trying to come up with a reason other than sheer madness, analysts point to the divergence of monetary policy between the U.S. and Europe, noting the ECB last week cut rates and hinted at QE, while the U.S. is tapering and eyeing rate hikes as soon as mid-2015.
Ireland's first bond sale since exiting its EU bailout appears set to be a blockbuster, with the government reportedly receiving indications of interest worth €9B for the planned sale of €3B in 10-year debt.
The demand has caused the yield on existing 10-year paper to drop 8 bps to an eight-year low of 3.27% compared with a peak of 15% in 2011.
Based on early orders, the new notes will carry interest of 3.55%.
Vanguard finally moves into the international and emerging bond market ETF space, launching today its Total International Bond ETF (BNDX) with expense ratio of 0.20% and its Emerging Markets Government Bond ETF (VWOB) with expense ratio of 0.35%. Both are hedged against currency exposure. Possible competitors include: GLCB, IGOV, EMB.
Vanguard Total International Bond ETF seeks to track the performance of a benchmark index that measures the investment return of investment-grade bonds issued outside of the United States.
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