The German yield curve is steepening.
The gap between 2-year and 30-year bond yields has widened to its highest level since 2019 — driven by growing concerns over a looming surge in German government debt. Source: Bloomberg, HolgerZ
The economic slump in Germany worsened in Q2.
GDP fell by 0.3% in Q2 QoQ, worse than the initial estimate of -0.1%, mainly due to a sharp drop in capital investment, which declined 1.4%. Consumer spending rose by 0.1% QoQ, contributed less than previously thought, while government spending rose 0.8% QoQ. The size of the German economy is currently still slightly below its 2019 level, ING's @carstenbrzeski has calculated: "It looks increasingly unlikely that any substantial recovery will materialise before 2026," he says. Source: Bloomberg, HolgerZ
Interesting comparison between Europe vs US with regards to the use of air conditioning and the death rate during heatwaves.
EU commission: " The adoption of air conditioning in Europe has been a topic of concern due to its potential impact on health and safety during heatwaves. In Europe, the number of deaths during heatwaves has been significantly higher compared to the United States, with a mean of 83,000 deaths annually relative to 20,000 deaths in North America. This disparity is attributed to the lower adoption of air conditioning in Europe, which is less common than in the US. The lack of air conditioning in many European homes forces residents to rely on less effective cooling methods, such as electric fans, ice packs, and cold showers, which can lead to increased exposure to extreme heat and heat-related illnesses".
So now Europe is supposed to pay for Ukraine ?
Not a big surprise to see EU defense stocks plummeting today... Source: FT
Trump with European leaders sitting around his desk is the best photo of 2025.
Source: Mike Crispi @MikeCrispi
German 30y bond yields climbed to 3.35%, the highest level since 2011.
Investors are demanding higher term premia as the surge in bond supply weighs on the market. Source: HolgerZ, Bloomberg
France’s long-term borrowing costs are converging with Italy’s for the first time since the global financial crisis.
Yields on 10-year French government bonds have jumped above 3 per cent over the past year, as months of political instability and concerns about the public finances take their toll. This has brought France’s benchmark borrowing costs to just 0.14 percentage points less than those of Italy, whose bond yields have been driven lower as a display of fiscal prudence from Giorgia Meloni’s administration has won over investors. The convergence has upended long-held views on France’s position as one of the region’s safest borrowers and Italy as one of its most risky, with a huge stock of public debt equal to about 140 per cent of GDP. Italy’s “spread” over France — the difference between their bond yields — ballooned to more than 4 percentage points during the Eurozone debt crisis of the 2010s. Source: FT
The cost of Nutella in Germany is rising faster than overall inflation.
A 750g jar has gone up by nearly 40% since 2019, far outpacing Germany’s general inflation rate of 21.8% over the same period. But this isn’t just about hazelnut spread: food prices in Germany as a whole have climbed by 38.4% since the end of 2019, according to Eurostat’s Food CPI. That’s much higher than in Italy (+29.5%) or France (+25.9%), highlighting how sharply grocery bills have risen in Germany. Source: Bloomberg, HolgerZ
