On Monday morning, the yield on the ten-year German government bond hit the 1.231 percent mark.
It was as high as it was last eight years ago.
In the bond market, rising yields are associated with falling prices.
Accordingly, investors separated from the German government bonds on Monday.
The Bunds were available for 88.955 percent of their nominal value (100 percent) on Monday.
Compared to the previous day, they lost 0.249 percentage points.
Gregory Bruner
Editor in Business.
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The reason for the sale of the bonds is probably the persistently high inflation.
For Germany, the German statistical authority recently reported an inflation rate of 7.9 percent in May.
Its counterpart for the euro area, Eurostat, then reported 8.1 percent across the jurisdiction.
These values increase the pressure on the European Central Bank (ECB) to act to counter inflation with its monetary policy.
According to several statements by the monetary policy council of the ECB and President Christine Lagarde, the first interest rate hike is to be expected in July of this year.
Opinions differ on how high the increase should be.
A step of 0.5 percent (50 basis points) would be drastic, which would end the days of negative interest rates in one fell swoop.
Higher central bank interest rates, in turn, mean for states that they can no longer refinance themselves on the most favorable terms.
This means that interest coupons on government bonds are likely to be higher in the future.
The old, very low-interest securities would then no longer be attractive to investors.
Many investors are now likely to sell their old bonds in anticipation of the more profitable bonds.
With the higher returns, investors receive more than they had invested over the entire holding period.
However, since the money is currently losing its value unusually quickly, the return of 1.231 percent compared to inflation of 8.1 percent will ultimately not mean a real profit.