Rising demand for German Bunds due to trade tensions and US policy uncertainty.

From Morningstar: 2025-06-23 04:26:00

Amid trade tensions and diverging central bank policies, German Bunds are favored by risk-averse investors. The 10-year Bund yield surged in March but is currently around 2.48%. German fiscal stimulus may keep yields elevated. US Treasuries face pressure from tax bill concerns and inflation worries, boosting interest in Bunds.

Investors are cautious about US Treasuries due to policy uncertainty. Interest in Bunds may continue till US creditworthiness is restored. Rising government debt and geopolitical uncertainties make 3% interest on Bunds the new normal. DWS sees Bunds as solid investments with higher yields than US Treasuries.

German Bunds are gaining appeal but may not replace US Treasuries as a global safe haven. The market for German bonds is smaller and less liquid. Eurozone bonds offer a diversification of currency zones. Bunds remain attractive to euro-based investors due to liquidity and Germany’s AAA rating.

Long-term German government bonds may not offer reliable protection against equity volatility. The yield curve has steepened, but long-maturity Bund investments may not be justified. European asset flows show preference for shorter-duration bonds. Eurozone spreads remain tight, with Italian, French, and Spanish spreads at multiyear lows.



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