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Bond market extends selloff after seismic German spending pledge
Reuters ^ | March 6, 20259:05 AM ES | Marc Jones

Posted on 03/06/2025 7:43:16 AM PST by Miami Rebel

LONDON, March 6 (Reuters) - World financial markets kept on a radical readjustment course on Thursday after U.S. President Donald Trump's shakeup of the transatlantic relationship spurred a seismic, half-a-trillion-euro shift in German defence and infrastructure spending. The European Central Bank cut its interest rates again, as expected, and said monetary policy was becoming less restrictive, which traders took to mean another cut in April might not be a given - giving the euro another boost.

That would normally suck up traders' attention. But it was just one of a myriad factors in play, with a global bond market selloff still in full swing a day after the 10-year German Bund yield - a major driver of worldwide borrowing costs - saw its biggest rise since the 1990s. Those Bund yields were up 6 basis points at 2.847%, having jumped as high as 2.929% Wednesday. The euro rose by as much as 0.5% after the decision to a 4-month high of $1.0845 , while European stocks (.STOXX) also took a breather after a 10% rally this year.

"The reality is that I still don't think the enormity of the (German) news has got close to being fully comprehended and digested by global investors yet," said Deutsche Bank's Jim Reid, who estimated that Wednesday's Bund yield spike was the biggest move since German reunification in 1990.

The global implications had been evident overnight. Japan's 10-year government bond yield had hit a near 16-year high, while the U.S. 10-year Treasury note yield was climbing again in early U.S. trading despite rising bets on more Federal Reserve rate cuts following recent patchy data there.

Focus also remained on the global trade war after 25% U.S. tariffs on imports from Mexico and Canada were imposed on Tuesday along with fresh duties on Chinese goods.

(Excerpt) Read more at reuters.com ...


TOPICS: Business/Economy
KEYWORDS: bunds; rates
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I've been buying European stocks for the first time since the Berlin Wall came down, focusing on defense contractors like Saab and BAE Systems. Almost perversely, the fact the Germans plan on easing their famous financial restraint and expand military spending has been an elixir for the equity markets.
1 posted on 03/06/2025 7:43:16 AM PST by Miami Rebel
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To: Miami Rebel

They can spend all they want on the military.

Where are they going to get the soldiers?


2 posted on 03/06/2025 7:44:43 AM PST by dfwgator (Endut! Hoch Hech!)
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To: Miami Rebel

If Deep States have been laundering US taxpayer money through Ukraine to prop up Europe’s welfare states, buckle up...

Now that the gravy train has ended, Europe will be in for a world of hurt.


3 posted on 03/06/2025 7:46:32 AM PST by mewzilla (Swing away, Mr. President, swing away!)
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To: dfwgator

Where are they gonna get the money?


4 posted on 03/06/2025 7:46:54 AM PST by mewzilla (Swing away, Mr. President, swing away!)
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To: Miami Rebel

And strangely, the Euro is jumping vs. the dollar

One would think the opposite would happen.


5 posted on 03/06/2025 7:47:36 AM PST by PGR88
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To: mewzilla

Got a mirror?


6 posted on 03/06/2025 7:47:47 AM PST by dfwgator (Endut! Hoch Hech!)
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To: mewzilla

And I’m not just taking about the PIIGS.

I mean every country in Western Europe.


7 posted on 03/06/2025 7:49:39 AM PST by mewzilla (Swing away, Mr. President, swing away!)
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To: mewzilla

Every German will get a printing press and crank out currency twenty four/seven.

It will more fun than Bitcoin!

Lol.


8 posted on 03/06/2025 7:50:08 AM PST by cgbg (The Democrat Party is a criminal enterprise.)
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To: dfwgator

With our republic restored, we have a way of digging ourselves out of the hole our Deep State has shoved us into.

Europe doesn’t have that.


9 posted on 03/06/2025 7:51:17 AM PST by mewzilla (Swing away, Mr. President, swing away!)
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To: Miami Rebel

As long as companies can afford to buy back the bonds, I think bonds are almost always a solid bet to buy. If this were 1929 or a repeat, it might be different.


10 posted on 03/06/2025 7:52:23 AM PST by Jonty30 (I have invented blackened salmon salad by baking it in the oven for too long. )
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To: Miami Rebel

Honestly, I don’t understand why gold hasn’t shot up following the remarks by European leaders. Macron, Starmer, von der leyen and others are making public statements preparing the European public for war with Russia. It’s insane. These people WANT war. And unfortunately, the nuclear genie is going to get released from the bottle this time.


11 posted on 03/06/2025 7:53:11 AM PST by Obadiah
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To: dfwgator

Plenty of Turks and now Syrians in Germany. Sign them up.


12 posted on 03/06/2025 7:57:53 AM PST by Trinity5
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To: mewzilla

Ummm the whole article is about the bond market. Borrow it of course.


13 posted on 03/06/2025 7:58:49 AM PST by Trinity5
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To: Trinity5

I said it on another thread, they should just go ahead and declare a Jihad on Russia.


14 posted on 03/06/2025 7:59:29 AM PST by dfwgator (Endut! Hoch Hech!)
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To: PGR88

The euro getting stronger against the dollar is good news for America. It makes their imports to America more expensive and less profitable.


15 posted on 03/06/2025 8:00:13 AM PST by wildcard_redneck ( )
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To: cgbg

German debt is 60% of their GDP. Ours is 120%.


16 posted on 03/06/2025 8:10:42 AM PST by Miami Rebel (pro-)
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To: dfwgator
Where are they going to get the soldiers?

Easy, arm all their "migrants". This plan worked well for the Roman Empire until their barbarian army decided to take over. But up until then it was party all day every day!

17 posted on 03/06/2025 8:11:16 AM PST by pepsi_junkie ("We want no Gestapo or Secret Police. F. B. I. is tending in that direction." - Harry S Truman)
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To: dfwgator
Where are they going to get the soldiers?

An important question no one but YOU is asking...

18 posted on 03/06/2025 8:12:51 AM PST by GOPJ (Delta just Bud Lighted themselves - freeper dfwgator)
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To: All

For years, . . . YEARS . . . German bonds were offered for negative interest rates. You paid them for the privilege of lending them money. Ditto Japan. Ditto all sorts of places, with the US tipping into negative now and then.

People are probably too young. They don’t realize capitalism failed in 2009. Globally. When you cannot be in business unless your central bank creates trillions from nothingness, to lend to the government that borrows those trillions that came from nothingness, then you do not have capitalism.

What you have is global cooperation to just keep the wheels turning so that the current decision makers can expect their pensions to be paid.

Germany has been hard core about fiscal restraint. For decades.

But the last two years their GDP has been smashed and frankly, they do not dare to explain why. The reason is they thought they could find an alternate source of natural gas. They didn’t. Germany’s natural gas consumption is down. Big. The answer to not buying Russia gas was not buying it from elsewhere, because elsewhere had none available for them. No, the answer was don’t burn it. They keep the people warm by shutting down the factories.

So deficit spending is their current plan, because they STILL do not dare to accept that they must buy Russian gas. This has sent their previously <0% bond yields up and they will create money to power government spending.

Oh and when your yields go up, so does your currency. That’s why the dollar is down. But no, it will mean nothing for exports. Germany’s lack of nat gas for the factories means they can’t produce anything.


19 posted on 03/06/2025 8:30:09 AM PST by Owen
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To: Miami Rebel

Today.

Unfortunately for them they are not a world reserve currency—which means the international bond market gets to use them as a chew toy.


20 posted on 03/06/2025 8:33:08 AM PST by cgbg (The Democrat Party is a criminal enterprise.)
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