BlackRock: Cross-Atlantic China Welding Consumables, Inc. Encounters Debt "Black Hole", Merkel's 500 billion euro borrowing plan scares off safe-haven buyers.

Alex Brazier, Global Head of Investments and Portfolio Solutions at BlackRock, pointed out that despite European investors possibly pulling funds back from the US to their home countries, German government bonds are currently not attractive due to Germany's ambitious fiscal expansion plans. Brazier stated in an interview, "Given the scale of Germany's fiscal expansion, German government bonds are actually not attractive, even with the trend of capital flowing back to Europe from across the Atlantic." He added that BlackRock actually prefers UK government bonds. German government bonds have been a safe haven choice for investors avoiding the volatility of US government bonds this year - the policy uncertainty during the Trump administration has made the US bond market unstable. However, with the market refocusing on Germany's increased borrowing plans, long-term German government bonds are once again under pressure. This week, the yield on 30-year German government bonds surged by 11 basis points, marking the worst weekly performance since Berlin announced a significant increase in defense and infrastructure spending plan in March, reaching a one-month high of 3.10% at one point. The yield on 10-year German government bonds is currently hovering around 2.57%, struggling to effectively break below the 2.50% level. Earlier this week, the German Chancellor Friedrich Merz's cabinet approved the 2025 budget and medium-term fiscal plan. The budget for this year includes an additional net debt of 82 billion euros ($96 billion), with the total net borrowing over the next five years until 2029 amounting to around 500 billion euros. Brazier pointed out that, although BlackRock is cautious about German government bonds, there is ample evidence showing that European investors, especially domestic institutions, are shifting from the US market to assets closer to home in Europe. "We have seen this impact from the movement of the dollar, from trading flows, and investor surveys also indicate that they are still considering pulling capital back to Europe," he said, adding that US investors "are finding more opportunities in the European region."