Original Publish Date » April 8 , 2025
Last Updated » 2 weeks
Bloomberg » In Germany, the 10-year bond at 2.61% reflects the prospect of a flood of bond issuance as the government ramps up defense spending. Meanwhile, the rate on 10-year Japanese bonds has soared after spending years around zero and is now around 1.25% as investors brace for tighter monetary policy there.
While both are still well below Treasury yields, they’re at levels that makes them look more attractive than Treasuries to European and Japanese investors who hedge their dollar exposure when buying US securities. That might entice investors to shift allocations to their home markets, where the policy outlook appears more stable.
“The idea that various of the administration’s policies could undermine foreign demand for Treasuries has been gaining currency,” said Matthew Raskin, head of US rates research at Deutsche Bank AG.
It all adds up to a world where US exceptionalism no longer is the dominant theme, with potentially momentous long-term implications: Deutsche Bank warns of a “confidence crisis” in the dollar, while UBS Group AG sees a shot in the arm to the euro’s status as a global reserve currency.
