AUY - In The Monetary Easing Race The ECB Is A Ferrari Amongst Fiats

• German yields are more likely than US yields to decline, widening the UST minus German bond yield differential, putting downward pressure on EUR/USD. The United States’ fiscal impulse is greater.
• The ECB is providing greater monetary stimulus - larger asset purchase program/GDP, negative rates, TLTRO's (dual-rates) - than the Federal Reserve and will lag in removing policy accommodation.
• There are more excess euros than US dollars in each respective banking system as well as a lower German bond free float than US Treasuries.
• This means ECB buying has outpaced Euro-area government issuance while Federal Reserve US Treasury buying has and will continue to lag issuance creating greater government bond supply in the US than in Europe.
• The euro is a global risk-on sentiment currency while China yields have shifted to pricing in weaker global growth.

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