Bid On German Fiscal Uncertainty

In terms of explicit drivers, the most recent round of richening in core global bond markets comes on the back of continued fiscal uncertainty re: Germany, with domestic newswires suggesting that the German government wants to postpone Thursday’s budget meeting.

• A quick reminder that this is all tied into last week’s well-documented constitutional court ruling against the government re: fiscal spending rules.
• The postponement of the meeting points to a lack of agreement within the ruling coalition re: how to tackle the ’24 fiscal hole created by the decision.
• The wires noted that without a shortening of the deadline in the Federal Council, a decision on the ’24 budget would not be possible before the end of ’23.