Topic
Three month cross currency basis has gapped wider and the yen has retraced nine figures in eight sessions. European funds that borrowed cheap yen to buy dollar credit are the marginal seller.
The ten-year gap to Germany has widened 23 basis points since June with no rating action and no failed auction. European long duration is repricing for the same reason American long duration is, and a contested budget is the local excuse.
Bullion has risen 9.7 per cent in three weeks while long Treasuries fell, breaking a relationship that held for most of the past decade. The correlation between gold and the ten-year yield has turned positive, and that is the whole story.
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