U.S. bonds the cheapest since 1990 versus German bunds

U.S. government debt dropped to the least costly level since March 2011, when measured by real yields and the best relative value compared with German bunds in more than 23 years, after the longest descent in Treasuries in 2013.

Subjected to inflation, 10-year U.S. notes yielded 0.91 percent last week or 1.77 percentage points more than U.K. gilts real yields, the widest spread in over 25 months.

Against Germany, the notes are the cheapest in 23 years when adjusted for the most recent record-low interest rates around the world, which curved the normal relationship.

Treasuries have lost 0.33 percent this year, including reinvested interest, compared with 0.93 percent for the global sovereign bond market, Bank of America Merrill Lynch indexes show.

Treasury 10-year notes fell in each of the past three weeks, the longest stretch since December. Yields have risen from 1.66 percent on April 26 amid reports showing gains in jobs and consumer confidence. The price of the benchmark 1.75 percent security due May 2023 declined 15/32 last week, or $4.69 per $1,000 face amount, to 98 5/32.

Wall Street stocks` rise into fresh record territory reduced earlier safe-haven bids for bonds.

Speculation about whether the U.S. Federal Reserve will begin slowing its bond purchases later this year also put selling pressure on the debt market, as analysts have become more comfortable with the view that the economy is on a firmer footing and job growth is on a sustainable path.

Three Federal Reserve regional bank presidents, Richard Fischer of Dallas, Charles Plosser of Philadelphia and Jeffrey Lacker of Richmond, called last week for the central bank to phase out the $40 billion monthly purchases of mortgage-backed securities. It’s also buying $45 billion of Treasuries a month.