German Debt Has Worst Day Since Aftermath of Berlin Wall’s Fall
The yield on Germany's 10-year bonds surged 30 basis points, their worst day since the fall of the Berlin Wall, as Chancellor-in-waiting Friedrich Merz unveiled a sweeping fiscal overhaul that will unlock hundreds of billions of euros for defense and infrastructure investments. The plan has prompted hopes that it will boost the European economy and put the euro on track for its best three-day run since 2015. However, investors have long argued that Germany's tight fiscal constraints are hampering national growth.
- The massive injection of government spending could be seen as a deliberate attempt to recalibrate Europe's economic strategy away from austerity and towards a more expansionary approach, similar to Japan’s post-bubble recovery.
- Will the German debt crisis serve as a catalyst for a broader reassessment of European fiscal policy and its implications for the global economy?