The complete history of German bond yields, from Napoleon to Angela Merkel
Any given day in the global bond market can be fairly snooze-worthy. Bond yields tick up by a few basis points, and down by a few basis points. Ho-hum. That’s the case today in the market for German government bonds (known as bunds). Yields on the 10-year bund declined by about four basis points, or 0.04 percentage points, to 1.12%. In other words, low.
But in my experience, the best way to make sense of
But there’s more. We grabbed estimates of long-term bund yields from data provider Global Financial Data. With the best numbers we have going back to 1815, these are the lowest German bond yields on record. Pretty remarkable.
Now, it’s best to think of these numbers as a broad estimate of interest rates. The benchmark 10-year bund that hit a low today didn’t exist 200 years ago, not least because Germany as we know it today didn’t exist 200 years ago.
Back in 1815, the dominant power in the confederation of German-speaking states, formed that year after the final defeat of Napoleon Bonaparte at
At any rate, if you’re going to have long-term data series like this in the world of fixed income, a certain amount of stitching and pasting is required.
Also, cutting. You may have noticed the odd gap in the graph around 1920. That’s because I axed the yield data around the hyperinflation of 1922-23, which rendered Germany’s bonds worthless. And it’s not just me. The irreplaceable survey of
The government held yields steady throughout the war years. After the war, yields on West German bonds rose, along with those of most advanced economies (although apples-to-apples comparisons are impossible because of various changes to how the bonds were taxed).
German yields most recently spiked in the 1990s around the time of the reunification. But since then, it’s been pretty much a one-way ride to the record low levels we see today.