German Yields Decline for Lack of Confidence or Expectation of Lower Rates at the Fed?

QUESTION: Mr. Armstrong; Do you agree with Bloomberg that the yield on German bunds has declined in anticipation of the Fed lowering rates?

JV

ANSWER: No  The falling yields on German government debt is simply intensifying the trade to buy German and short everything in the South in anticipation of a failed Euro. Also, there has been tremendous concern about the European banking system as a whole. It really a stretch to claim yields are declining in Germany because the expect lower rates at the Fed. This is purely a speculative punter’s play – not a shift in strategic portfolios. Italy’s budget battle with Brussels remains a concern as is the case with BREXIT. There is just a growing lack of confidence in Europe. I do not believe that even the technical pattern implies such a shift at the Federal Reserve as the reason for capital movement within the Eurozone market.

Latest Posts

The 10 Bn Euro Paris Olympics Disaster

We’re fast approaching. ? The Olympic Rings are on the Eiffel Tower. @Paris2024, let’s do this! pic.twitter.com/STWl6uSnfS — The Olympic Games (@Olympics) June 7, 2024 The French are outraged by [...]
Read more

North Korea Engages in Biowarfare?

North Korea’s qualms with its southern neighbor have long been a petty battle. North Korea floated 1,000 balloons filled with trash and fecal matter to South Korea last month. What [...]
Read more