Bunds to Fall as Europe Nears Fiscal ‘Transfer Union,’ MEAG Says
This article is for subscribers only.
German bunds may underperform U.K. and U.S. bonds as Europe’s biggest economy is likely to take on supporting its weakest euro-region partners as a permanent burden, according to MEAG Munich Ergo Asset Management GmbH.
“Bunds enjoy a huge risk premium right now, which they may no longer enjoy to the same degree as we are moving to a kind of transfer union,” where weaker nations such as Ireland and Portugal are officially supported by their stronger neighbors, Reiner Back, who oversees more than $150 billion as head of fixed income and foreign exchange at MEAG in Munich, said in a telephone interview.