I’m gonna buy a mess of these. But like what will be my German Bund’s 10-year yield at -0.030 percent? I mean, will there still be any of my investment left?
“Nobody buys bunds at these yield levels thinking they are attractive. Demand for haven assets is being driven by fear of Brexit and growth concern. Investors are buying bunds as a hedge against uncertainty.”
Money is like water (or maybe like beer). It has to go somewhere. And 40 billion euros just made its way to Germany.
While fear has driven money away from Greece and Spain and co, making the government cost of repaying debt in these countries seem prohibitive, in Germany it has been quite different. Fear has boosted Germany coffers…
One thing is for sure, putting it in Greek bonds is risky. Spanish, Italian and Portuguese bonds don’t seem much safer either. But German bonds, in contrast, feel as safe as a safe house in a land with no crime. In fact so safe are German government bonds or bunds, perceived to be, that there have been times when the yields on some of them have been negative.
So actually, Germany has done rather well out of fear created by the euro crisis – or should that be the other way around – a euro crisis created by fear?
Observing Hermann 