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The Endgame for Bunds: Natixis’s Rene Defossez published in Investment Week

The unnaturally low yield for Bunds is a very poor measure of Germany’s credit risk, says Rene Defossez, fixed income strategist at Natixis. His commentary piece on the topic was published this week in both Investment Week and its sister publication Investment Europe. The analysis, based on the correlation of yields and peripheral bonds, asserts that Germany’s financial exposure to the eurozone risk is potentially colossal; particularly now the Bund yield sits at 1.50%. Instead of looking at the Bund yield as a gauge of ‘safe haven’ status, Defossez says investors should look at other indicators like the Credit Default Swap (CDS), which is currently very high at 135bp.

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