As money flows out of the periphery of Europe and into Germany it drives yields to unnaturally low yields.
We set a record low yield in German 2-year yields this morning of a scant 14 bp. Even US 2s yield 0.235%!
The lower yields go, the lower the euro goes….
I guess the good news is that the downside in yileds is limited for Germany, though the spread with the US could continue to spread in favor of the US if growth picks up in the States…
