Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Collapsing German Yields Impacting Currency Markets

By

This currency move will help support German manufacturers at the expense of those in Japan. In that sense, the ECB has accomplished something - making Germany more competitive using currency devaluation.

PrintPRINT
With German government yields collapsing, the 2-year rate just touched a new low today -- negative 6bp. The 3-year yield is negative as well.

German 2-Year Yield:

This is now impacting the currency markets. As an example the Germany-Japan rate differential at the short end of the curve is widening -- the 2-year differential (Japan rate minus Germany rate) is at a record.

In fact some are looking at this as the new carry trade, long the yen short the euro -- the reverse of the original carry trade. And that is pushing up the value of the yen, particularly against the euro. Euro-yen has touched a new multi-year low today.

Euro-Yen (Number of Yen Per One Euro):


This currency move will help support German manufacturers at the expense of those in Japan. In that sense the ECB has accomplished something - making Germany more competitive using currency devaluation (though it's not clear that this was their intent). Welcome to the world of negative rates and currency wars.

Twitter: @SoberLook
No positions in stocks mentioned.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE