John Mauldin Is Wrong About The German Yield Blowout

It’s our view that the rise in yields around the world is the result of optimism over growth, and the waning desire to hold risk-light assets.

John Mauldin is of the view that it’s a bad signal, and he argues that investors are growing weary of sovereign debt, and as such.

In his latest letter he wrote: “Look at what is happening to German bonds, supposedly the safest in Europe. They are up about as much as their counterparts. “

And he published this chart:

chart

Yes, yields have jumped… but let’s get a little perspective.

As this chart from @dutch_book makes pretty clear, spreads between periphery countries and Germany are still extremely wide (only France and the Netherlands have stayed in a tight bound).

Sure, Germany has some issues, and the euro could pose a threat to it ultimately. But there’s no big sign it’s happening yet.

chart

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