German-U.S. Yield Gap Widens as Yellen Splits From ECB Officials
- Ten-year yield spread widest in more than three weeks
- ECB's Liikanen says bond purchases will be extended if needed
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A divergence in monetary policy between the euro area and the U.S. helped keep down German bond yields relative to Treasuries, widening the 10-year yield gap between them to the most in three weeks.
Bunds are outperforming as traders and analysts deliberate whether the Federal Reserve, led by Chair Janet Yellen, will raise interest rates next week, while the European Central Bank sticks to its message that it’s able to expand monetary stimulus if needed. ECB Governing Council member Erkki Liikanen said on Thursday the central bank was committed to continuing asset purchases “until the end of September 2016, or beyond, if necessary.” He also said that the region’s recovery was proceeding at a slower pace than expected.