According to recent data from global index provider FTSE Russell, US Treasuries have become expensive compared to other major sovereign bond markets over the last four years, as measured by US yield spreads versus the FTSE World Government Bond Index excluding the US (WGBI ex. US). US yield spreads in 7 to 10 years have fallen from a peak of about 209 basis points in mid-2018 over the WGBI ex. US index to current levels of 79 basis points.
During times of economic turbulence and weak growth, US Treasury yields tend to fall faster compared with treasuries in other developed markets. Even with vaccine in the earliest days of availability, the US could face a resurgence of COVID-19 and another potential lockdown. Investors might be weighing US versus non-US government bonds and looking for opportunities in the broader international treasury market.
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