Archived IMT (2010.07.27)

EURO-BUNDS CORRELATIONS: Euro proving to be more responsive to rising bund yields than USDX is to rising US bond yields. EURUSD correlation with German 10 year yields stood around 0.93 since May vs. -0.62 for the correlation between USD Index and US 10 yr yields. The CHARTS below http://chart.ly/rmn3ns show EURUSD is more responsive to gains in German bund yields (lower left chart) as opposed to the relationship between USDX and 10-year note (upper left), where the correlation breaks more occasionally and sometimes becomes inverse. This means that EURUSD will likely extend gains on strong Eurozone figures, which may include econ data and European earnings.