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Spreads Between U.S. Treasuries and Bunds Widen the Most This Year

“The extra yield 10-year Treasuries offer over same-maturity German bunds approached the most in eight months on speculation the U.S. economy will grow faster than Europe’s in 2013.

The difference between the two rates was 39 basis points. The spread widened to 41 basis points on Dec. 18, which was the most since April. U.S. house prices in 20 cities probably rose 4 percent in the 12 months ended Oct. 31, the best performance since June 2010, based on a Bloomberg News survey of economists before the S&P/Case-Shiller report at 9 a.m. in New York today.

“U.S. economic growth is much faster than European growth,” said Kazuaki Oh’e, a debt salesman in Tokyo at CIBC World Markets Japan Inc., a unit of Canada’s fifth-largest lender. “The U.S. 10-year yield may go a bit higher. The rise in German yields will lag behind the U.S.”

Benchmark U.S. 10-year yields were little changed at 1.77 percent as of the 3 p.m. close inTokyo, according to Bloomberg Bond Trader prices. The price of the 1.625 percent security due in November 2022 was 98 22/32. The rate has climbed from the record low of 1.38 percent set in July. It compares with the average of 3.66 percent for the past decade.

Trading in Treasuries closed in Japan and will stay shut in the U.K. for Boxing Day, according to the Securities Industry and Financial Markets Association. It will open as usual in New York today after being shut yesterday around the world for Christmas, according to the website.

Germany’s 10-year note yielded 1.38 percent as of the end of last week before trading stopped for the Christmas holidays…”

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