Germany may implement a “ shadow budget” to buy even more assets. Why anyone would invest in European equities at this point is beyond me.

by Crypto556

via usnews:

LONDON (Reuters) – Germany’s 30-year government bond yield rose into positive territory on Tuesday for the first time in over a month, lifted by expectations for fiscal stimulus and uncertainty over whether the ECB will launch asset purchases this week.

Germany can counter a possible economic crisis by injecting billions of euros into the economy, Finance Minister Olaf Scholz said on Tuesday, signaling readiness for a big stimulus package if the economy tips into recession.

“If those rumors actually become true and you got a strong fiscal boost from the German side it would be worth taking a look at how markets reacted following Trump’s election in 2016,” said KBC rates strategist Mathias van der Jeugt.

Bond yields surged in late 2016 following Donald Trump’s U.S. presidential victory, which fueled expectations for massive fiscal stimulus.

On Monday, Reuters reported Germany was considering creating a “shadow budget” to boost public investment above and beyond limits set by its national debt rules, sparking a bond sell-off.

The 30-year German Bund yield rose as much as 4 basis points on Tuesday to 0.009% , its highest since early August. It was hovering around 0% in late trade.

A return of the 30-year bond to a positive yield would mean the entire curve of the euro zone’s benchmark bond issuer would no longer be in negative territory.

 

 

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