The black line shows the US 10-yr treasury, the red line shows the German bund, the blue line shows the British gilt and the green line shows the Japanese 10-yr treasury. The above chart shows that since 17 May general yields have declined (green rectangle). As such, the US-treasury has still maintained its general relative strength against European yields, which is likely to make the USD an attractive destination. We do note that Japanese monetary policy is ultra-loose, with an effort to maintain its yield at 0%. As such the general decline of the US 10-yr treasury has been felt greatest against the Japanese economy. Therefore, besides the reputation of the JPY been a safe-haven with the majority of its debt being held domestically and although on an absolute basis the US/JP spread is positive, the spread contraction with Japan contributed to the USD decline against JPY over the last few days as geo-political tensions increased.
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