German government bonds became the primary safe-haven asset in global bond sell-offs, and investors had few options due to concerns about the overheating of the US economy and the financial situation in other parts of Europe. This week, 10-year German bond yields fell 0.2 percentage points, while yields in countries such as the US and France continued to soar, rising 0.05 and 0.22 percentage points, respectively. “Demand for safe assets is rising,” said Reinout De Bock, head of interest rate strategy at UBS Europe. He pointed out that we are currently in an “unprecedented economic cycle. Economic growth is strong, but energy price risks still exist, and capital demand continues to expand.” “The assets of core European countries are becoming safe haven allocation targets,” said Ales Koutny, head of international interest rates at Pioneer Group. He mentioned Germany, but also the Netherlands and Switzerland. “First, they have historic advantages, namely lower debt/GDP ratios, better fiscal credibility, and lower policy uncertainty.” He also added, “The scale of trade liquidation we have seen is amazing” because hedge funds are being forced to sell off popular deals, such as betting that Dali bonds will outperform German bonds this week.

German government bonds became the primary safe-haven asset in global bond sell-offs, and investors had few options due to concerns about the overheating of the US economy and the financial situation in other parts of Europe. This week, 10-year German bond yields fell 0.2 percentage points, while yields in countries such as the US and France continued to soar, rising 0.05 and 0.22 percentage points, respectively. “Demand for safe assets is rising,” said Reinout De Bock, head of interest rate strategy at UBS Europe. He pointed out that we are currently in an “unprecedented economic cycle. Economic growth is strong, but energy price risks still exist, and capital demand continues to expand.” “The assets of core European countries are becoming safe haven allocation targets,” said Ales Koutny, head of international interest rates at Pioneer Group. He mentioned Germany, but also the Netherlands and Switzerland. “First, they have historic advantages, namely lower debt/GDP ratios, better fiscal credibility, and lower policy uncertainty.” He also added, “The scale of trade liquidation we have seen is amazing” because hedge funds are being forced to sell off popular deals, such as betting that Dali bonds will outperform German bonds this week.