Hedge Funds German Government Bonds
Hedge Funds Eye Major Sell-Off of German BondsHedge funds are betting on a major sell-off of German government bonds in the coming months, according to a poll of attendees to the biggest hedge fund conference. More than 50% of the hedge fund managers in attendance at GAIM International in Monaco said they expect Bund yields to double within a year. I served last year as Opening Day Chairman for the GAIM Conference; you can watch a video I recorded there on the Monaco hedge fund industry here.
Gavyn Davies, the founder of hedge fund Fulcrum Asset Management, told the Gaim conference that every hedge fund’s analytical model was signaling that the German bond market was too expensive.
He said Bund yields were being depressed by a big “capital flight” from other eurozone countries that was “one heck of a powerful force”. However, the former Goldman Sachs chief economist said this pressure would not continue to push down yields indefinitely.
Bund yields have dropped to all-time lows this year as investors look for safe haven assets in which to place their money. The 10-year Bund yield hit a low of 1.13 percent on June 1.
However the 10-year benchmark yield climbed 33 basis points to 1.53 percent on Tuesday, as investors have begun to expect a rescue for the wider eurozone that could weigh on Berlin’s creditworthiness. Source