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Short 10 Year German Bund - 22 August 2012.pdf

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This trade can be implmented using a number of different products including options, Futures and ETF's 

This trade can be implmented using a number of different products including options, Futures and ETF's

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Short Bunds 

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Like almost all major bond markets the German 10 year Bund has experienced a massive rally in terms of price since the early 1990’s. The two core reasons for the rise in prices and drop in yields were the fact that following the high inflation levels of the 1980’s central banks successfully got inflation levels under control and now inflation poses little if any worries. In the more recent past German Bunds have especially benefitted from the global financial crisis and the Eurozone debt crisis.
The Eurozone debt crisis has in particular forced Bund yields to fall to very low levels. The question is whether these very low yields will be held onto? While I do not believe we are about to experience a massive bond market crash (that will come but at a later stage) a correction in price with yields rising to more normal levels is very likely in the coming months for the reasons outlined in the attached report:
 

Like almost all major bond markets the German 10 year Bund has experienced a massive rally in terms of price since the early 1990’s. The two core reasons for the rise in prices and drop in yields were the fact that following the high inflation levels of the 1980’s central banks successfully got inflation levels under control and now inflation poses little if any worries. In the more recent past German Bunds have especially benefitted from the global financial crisis and the Eurozone debt crisis. The Eurozone debt crisis has in particular forced Bund yields to fall to very low levels. The question is whether these very low yields will be held onto? While I do not believe we are about to experience a massive bond market crash (that will come but at a later stage) a correction in price with yields rising to more normal levels is very likely in the coming months for the reasons outlined in the attached report:

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I have no positions in any stocks mentioned in the work, and no plans to initiate any positions within next 72 hours. I receive no compensation to write about any specific stock, sector or theme.

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Product ID:

W-00000167

Type:

For Sale

Status:

For Sale

Upload date:

22 Aug, 12 

Last updated:

22 Aug, 12 

Status change date:

22 Aug, 12