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December 13, 2018 | German Yields Decline for Lack of Confidence or Expectation of Lower Rates at the Fed?

Martin Armstrong

Martin Arthur Armstrong is the former chairman of Princeton Economics International Ltd. He is best known for his economic predictions based on the Economic Confidence Model, which he developed.

QUESTION: Mr. Armstrong; Do you agree with Bloomberg that the yield on German bunds has declined in anticipation of the Fed lowering rates?

JV

ANSWER: No  The falling yields on German government debt is simply intensifying the trade to buy German and short everything in the South in anticipation of a failed Euro. Also, there has been tremendous concern about the European banking system as a whole. It really a stretch to claim yields are declining in Germany because the expect lower rates at the Fed. This is purely a speculative punter’s play – not a shift in strategic portfolios. Italy’s budget battle with Brussels remains a concern as is the case with BREXIT. There is just a growing lack of confidence in Europe. I do not believe that even the technical pattern implies such a shift at the Federal Reserve as the reason for capital movement within the Eurozone market.

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December 13th, 2018

Posted In: Armstrong Economics

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