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2025-12-17 18:38:43
[German Bonds Underperform This Year; Institutions Say Current Levels Offer Relative Value Attractiveness] ⑴ Some institutions point out that German government bonds have underperformed in 2025 due to the market's failure to meet previous expectations for large-scale German fiscal spending, making current prices attractive to investors. ⑵ A senior portfolio manager at the institution stated that given German bonds' underperformance relative to US Treasuries in 2025, they have shown relative value. ⑶ This view anticipates that next year's government bond supply will be well absorbed by the market at current yield levels. ⑷ The German Financial Services Agency plans to announce its 2026 borrowing plan on Thursday, which will provide key information for the market to assess supply pressures. ⑸ This analysis argues that the valuation adjustment resulting from unmet expectations has created a more attractive entry point for German bonds, especially considering the yield spread compared to US Treasuries.
