Treasury Yields Likely to Continue to Widen Versus Bunds: Chart

(Bloomberg) -- The European Central Bank meets Thursday against a backdrop where investors in 10-year U.S. Treasuries are earning the highest yields relative to German notes since 1989. While the Federal Reserve has already raised its benchmark rate once and is expected to tighten policy at least twice more this year, policy makers in the euro area aren’t imminently stepping away from negative borrowing costs. Only a global equity sell-off or a more hawkish ECB can stop the difference in yields from widening further given that all resistance levels have been broken, according to Eric Oynoyan, a strategist at BNP Paribas.

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