Bond Bulletin

As the transatlantic alliance waivers, the German government is stepping up to lead with a dramatic change to its debt rules and a significant planned increase in defence and infrastructure spending. We discuss the impact on the bond market and what this means for investors.

What does this mean for fixed income investors?

Fundamentally, increased fiscal spending will support German economic growth. At a time when inflation is at reasonable levels, we expect that the ECB can continue cutting policy rates. While long-term yields in Germany screen as attractive on historical basis, they will likely continue to be volatile given the wider geopolitical situation. Timing the absolute peak in long-term yields will be difficult for investors; scaling into duration as policy rates come down may be a good strategy for investors with longer investment horizons.

About the Bond Bulletin

Each week J.P. Morgan Asset Management's Global Fixed Income, Currency and Commodities group reviews key issues for bond investors through the lens of its common Fundamental, Quantitative Valuation and Technical (FQT) research framework.

Our common research language based on Fundamental, Quantitative Valuation and Technical analysis provides a framework for comparing research across fixed income sectors and allows for the global integration of investment ideas.



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