The big shocker from Europe today: A 10-year bond auction in Germany failed to draw the expected volume of bids.
Most European governments are experiencing some sort of funding tension right now, but this was a big deal because Germany has always been a safe haven. Now that’s seemingly changed.
Now actually, this kind of “failed” auction happens from time to time in Germany. In itself it’s not that big of a deal. Yield wise, Germany is still borrowing money at dirt-cheap interest rates.
What’s really more startling though is the direction of yields on a day that’s so decisively risk off: They’re going higher.
Seeing Germany not catch this flight-to-quality bid is a major break in the pattern. And when it’s combined with the lack of interest at the auction, then it hits you: Germany is more like Greece than the U.S. in the sense that neither it nor Greece has a central bank as a lender of last resort.
Anyway, here’s the German 10-year yield. That’s a big one-day move.