after adp today the yields briefly touched at 4.05. I am confused - what does that mean? Is it a long term phenomena? If yes then what will happen to US financing of an external debt? Are we going to see a carry trade out of US to EUR? Why is USD stronger at the same time? I would really appreciate some ideas. I still think that this must be simple market mispricing (due to short term fears etc).
If the ECB raise once 25bps by the end of year and the fed cut by 100 bps then you get base rates at 4.25% on both continents. The question is how low is the dollar going to fall against the euro. 1.43?
but 100bps cut by fed is NOT priced in - so you really can not can't on it. additionally there is lower inflation in EU than in US - additionally benefiting schatz...