The spread in yields between U.S. 10-year notes and the Germany (10-year) bund is approaching a decade wide high prompting some European account buying of U.S. Treasuries against the German bund. The U.S.-German 10-year yield spread traded up to 1.1%, not far off the 2005 high for U.S. Treasury yield over German bund yield of 1.2% reached late in that year (low on below chart). Prior to 2005 this spread reached a high (low) of 1.5% in 1999 (see chart).
If the United States continues to see greater economic traction against a more deliberate pace of recovery in Europe, we might expect the 2005 yield high of 1.2% to be more thoroughly tested and perhaps breached. Once breached there would be a moderate risk of U.S. 10-year yields then testing the 1999 high of +1.5% over German 10-year yields.