03 Apr – 07 Apr 2017

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Yields fell in pretty much every segment of the bond market and, of the yields on 3, 10 and 20 year bonds, 10 year yields fell the most. As a result, the 3 year/10 year spread has tightened by 1 basis point to 77bps while the 3 year/20 year spread widened by 4bps to 136bps. It is a little unusual for these two spreads to go in opposite directions and usually some form of catch up occurs shortly thereafter. Such a divergence does not generally mean anything; short term demand or supply factors are typically the cause.

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