Rates Spark: Differences Brought Into Sharper Relief

The report highlights the widening gap between US and European rates as geopolitical volatility in the Middle East brings diverging macroeconomic backdrops into focus.

Key Takeaways

• 1.Macroeconomic divergence between the US and Europe is widening, reflected in the 10y US Treasury-Bund spread hitting its widest level since August 2025.
• 2.European rates have more potential for a rally than US counterparts due to disappointing PMIs and higher exposure to energy disruptions.
• 3.The ECB is leaning toward a June hike for credibility reasons despite a shaky growth backdrop, while the Fed remains hawkish with markets pricing further tightening.

Table of Contents

• Rates Spark: Differences brought into sharper relief
• The possibility of a deal drives rates market volatility
• Friday's events and market view
• Author
• Disclaimer

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