Great Graphic: US Interest Rate Premium is Rising

This Great Graphic, composed on Bloomberg, show the 10-year interest rate differential between the US on one hand, and German and Japan on the other.   

The yellow line is the spread between the US and Japan.   Since early April, the US premium has been confined between 103 and 121 bp.  

It is currently flirting with the top of this range after US Treasury yields rose in the response to the strongest Conference Board's measure of consumer confidence since Feb 2008 and the sharp rise in equity prices.  This helped lift the dollar to new highs of the day against the yen near JPY102.50.  In the past four sessions, the dollar has formed a base below JPY101. 

The US 10-year premium over Germany is pushing though 60 bp.  As the market prices in a tapering of Fed purchases, the US premium has risen to its best levels since April 2010.   The 2-year spread, which previously had done a good job of tracking the euro-dollar exchange rate,  is trading near the best levels since the fall of Lehman.  However, since mid-March it has been confined to roughly a 10 tick range from 18 bp to 28 bp.  It has not picked up the decline in the euro this month from above $1.32 to $1.28.