U.S. Treasuries Recover Against Eurozone Government Bonds
After a period of weakness, U.S. government bonds have begun to regain ground against their European counterparts, partly due to renewed expectations of interest rate cuts by the Fed.
The chart above shows the relative strength of 10-year U.S. Treasuries versus a basket of Eurozone government bonds.
A clear upward trend can be observed, starting in late spring and continuing through September, followed by a loss of momentum and a more sideways movement. This behavior partly reflects stronger expectations of rate cuts in the U.S., as the ECB has essentially completed its rate-hiking cycle.
However, the sideways pattern seen in recent weeks highlights the impact of uncertainties surrounding the main macroeconomic variables of the U.S. economy.
