On one hand, the negative yield situation in Europe was inherently deflationary. It was causing all sorts of problem with asset prices and pension funds, thanks to QE. On the other, the low rates in Bunds and other sovereigns dragged down the borrowing costs of corporates, which made it easier for companies to access capital to buy back stock.
One thing is indelibly certain, the great bull rally in German bunds is over, at least for the moment.
It’s not like people are selling bunds to buy stocks. And it’s not like markets aren’t near record highs, alongside bonds either. The fact that people are selling bonds and also selling stocks is indicative of fuckery, largess, which is likely a temporary problem and will be worked out soon.
One thing is certain, when comparing Bunds and other European sovereigns to American treasuries, they’re wildly overvalued, so maybe a firm repricing is in order.
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