Eurobonds in Favor Against U.S. Bonds

In a previous article in March 2012 I pointed out that it was the perfect time to get out of U.S. bonds and go into eurobonds. Just recently we have a huge confirmation that the market is favoring European bonds (EU) over U.S. bonds (TLT) (Chart 1). We see that the WisdomTree Dreyfus Euro ETF (EU) has shot upwards on 21 August 2012 on news that the ECB would buy Italian and Spanish bonds. That day, the euro jumped to a seven-week peak against the U.S. dollar.

Chart 1: TLT Vs. EU

U.S. bonds yields have not kept pace (yields have not risen) with the rise of european bonds according to the correlation in Chart 1. So investors should quickly take action. Read more here.