Storm Shelter

Panicked Investors Take Haven in Germany

angst at market
Frenzy at the Frankfurt stock exchange.
  • Why it matters

    Why it matters

    Is the flight into safe-haven German government bonds and out of peripheral euro zone bonds a repeat of the 2012 euro debt crisis?

  • Facts

    Facts

    • In addition to reduced growth forecasts for Germany and the euro zone, fears have mounted the U.S. economy is also slowing down after weak economic data.
    • German 10-year yields fell to a record low of 0.73 percent on Wednesday.
    • Greek 10-year yields rose to almost 7.5 percent and Greek stocks fell 6.8 percent, the biggest one-day loss since July 2012.
  • Audio

    Audio

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It almost looked as if the euro debt crisis was back front and center. Greek 10-year bond yields on Wednesday saw their biggest rise in more than eight months, while German debt was in high demand, just as it was during the single currency’s crisis back in 2012.

But the deja vu stopped there, analysts said. The steep declines in Germany’s bellwether DAX Index, which has fallen nearly 4 percent since Wednesday, is a reflection of weaker global growth, the Ebola epidemic, the Ukraine conflict and renewed worries about the recovery of Greece.

“There is a general uncertainty that is being pushed by political crises such as in Ukraine or with the Islamic State,“ said Timo Klein, a senior European economist with IHS Global in Frankfurt in an interview with Handelsblatt Global Edition. “The reason for the spread between German and Greek bonds is not due to a deterioration in euro zone countries but a general mood swing on the market.”

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