Foreign Investors Key To Absorbing Bund Supply

2025-05-14 07:20:00 ET

Summary

• As President Trump softens his approach to tariffs, markets should start paying more attention to the supply pressures in Bund markets.
• Our analysis suggests that foreign investors can play an important role in absorbing the hike in Bund issuance on the back of German spending plans.
• This should limit the upward pressure on 10Y Bund yields versus swaps.

By Michiel Tukker

Germany's spending plans could result in an additional €1tr in Bund issuance

With Trump’s tariff threats softening, markets can look at the bigger picture again, bringing us back to Germany’s ambition to spend, spend, spend. The supply of Bunds in the market should continue to increase, building on the significant increase seen in recent years. Germany’s spending plans may lead to an additional €1tr of issuance over the next decade, which represents an increase of 50% on top of the current outstanding amount of around €1.9tr in Bunds....

Read the full article on Seeking Alpha

For further details see: