German borrowing costs could surge to 2008 levels on debt brake shift, Goldman says
Published by Global Banking and Finance Review
Posted on March 5, 2025
Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.
Published by Global Banking and Finance Review
Posted on March 5, 2025
By Harry Robertson
LONDON (Reuters) - Germany's 10-year borrowing costs could surge to their highest levels in more than 16 years after politicians reached a historic deal on Tuesday to overhaul the country's debt brake, Goldman Sachs has said.
Friedrich Merz's conservatives and the Social Democrats agreed to create a 500-billion euro infrastructure fund and rewrite borrowing rules as they seek to revive a struggling economy and spend more on defence.
The implied extra borrowing via debt markets caused bond prices to tumble and yields to spike on Wednesday. Germany's 10-year borrowing costs were set for their biggest one-day rise since the late 1990s on Wednesday, up 26 basis points, taking them to 2.735%.
The extra borrowing and spending "would imply a 50-120 basis point increase in 10-year Bund yields over the medium term relative to our current forecasts of 2.5%, pointing to a potential range for Bunds of 3.0-3.75%," analysts at Goldman said in a note.
That would be the highest level since late 2008, when bond yields began to fall as central banks tackled the global financial crisis.
(Reporting by Harry Robertson; Editing by Amanda Cooper)