The spread between the yields of 10-year US and German government bonds is close to the largest it has been since the start of EMU. But we think the spread will continue to grow. With this in mind, we have lowered our end-2014 and end-2015 forecasts for the 10-year Bund yield by 50bp each to 1.75% and 2.00%, respectively, while leaving those for the 10-year US Treasury yield unchanged at 3.25% and 3.50%.
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