The German government picked a good time to sell bonds this week. A market once again fretting about the euro zone’s crippled periphery was more than happy to snap up a €5 billion ($7.03 billion) offering of 10-year paper by its core Wednesday. Indeed, it wanted just a piffling 3% or so for its trouble.
Now, you might wonder why investors are so hard on bonds from nations that need bailout funding (and they are—with equivalent Greek paper yielding a whopping 16%), and yet so very easy on those from the nation that will probably have to supply much of it, against the better judgement of many of its citizens.
But it wouldn’t do you any good because bunds fall into that ill-assorted basket of assets known as “safe havens,” and here logic doesn’t really apply.
For this basket is a key part of the “risk on, risk off” trade, a simplistically binary capital-market response to economic news that has been with us pretty much since those markets clawed their way out of the abyss in early 2009.
Πηγή: The Wall Street Journal