German bunds plunge as Merz says goodbye to austerity
Press Hub UCapital
Share:
Germany's investment plan for defense and infrastructure has caused a rise in Bund yields not seen since the reunification in 1990, as reported by Bloomberg. With the drop in German government bonds, many analysts are noticing a paradigm shift after years of fiscal conservatism.
On Thursday, March 6th, the 10-year Bund yield rose by 13 basis points, reaching 2.92%, the highest level since October 2023. Meanwhile, on Wednesday, March 5th, following the announcement of a sweeping fiscal reform aimed at unlocking hundreds of billions of euros for defense and infrastructure investments, the yield also increased by 30 basis points.
The collapse in German Bunds has had clear repercussions on global debt markets: Japanese government bonds are at their highest level in the past decade, and Australian and New Zealand rates are also surging; in the meantime, the euro extends its gains for the fourth consecutive day.
Thus, Germany is changing direction, also in light of the new Trump administration’s approach towards European issues, which has put many European leaders in a position to mobilize additional funds for the defense sector.
For the new German Chancellor Merz, the time has come to abandon austerity policies and focus on military spending consistently for the first time since World War II. It’s precisely Berlin pushing for a relaxation of European fiscal rules in these days.
On Thursday, March 6th, the 10-year Bund yield rose by 13 basis points, reaching 2.92%, the highest level since October 2023. Meanwhile, on Wednesday, March 5th, following the announcement of a sweeping fiscal reform aimed at unlocking hundreds of billions of euros for defense and infrastructure investments, the yield also increased by 30 basis points.
The collapse in German Bunds has had clear repercussions on global debt markets: Japanese government bonds are at their highest level in the past decade, and Australian and New Zealand rates are also surging; in the meantime, the euro extends its gains for the fourth consecutive day.
Thus, Germany is changing direction, also in light of the new Trump administration’s approach towards European issues, which has put many European leaders in a position to mobilize additional funds for the defense sector.
For the new German Chancellor Merz, the time has come to abandon austerity policies and focus on military spending consistently for the first time since World War II. It’s precisely Berlin pushing for a relaxation of European fiscal rules in these days.