Germany's cautious fiscal policies have drawn criticism, but in light of global market instability caused by U.S. tariffs, investors are turning to German bunds for safety. The yields on these bunds have decreased as demand increased due to broader market turmoil impacting U.S. assets. The country maintains a strong AAA credit rating due to its strict borrowing limits, although there are plans for possible increased debt to enhance military and infrastructure spending. This context is vital as global trade tensions affect Germany’s export-driven economy, prompting a renewed interest in its bonds.
Germany's extreme fiscal conservatism, criticized in the past, is now rewarded as investors flock to safe-haven assets like bunds amidst global market turmoil.
The turmoil in global markets, triggered by Trump's tariff impositions, shifted investor confidence towards safer assets, notably German government bonds.
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