BlackRock Bets German Bonds Will Be Hammered by Inflation Surge

BlackRock has increased bearish positions in German government bonds, betting a “pretty large inflation uptick” across Europe will push borrowing costs back above the 15-year highs reached last week. That view implies renewed upward pressure on EUR sovereign yields and downside for duration-heavy portfolios and European fixed-income instruments. Monitor upcoming Eurozone inflation prints and ECB communications; consider trimming duration exposure and hedging sovereign risk.

Analysis

BlackRock has increased bearish positions in German government bonds, betting a “pretty large inflation uptick” across Europe will push borrowing costs back above the 15-year highs reached last week. That view implies renewed upward pressure on EUR sovereign yields and downside for duration-heavy portfolios and European fixed-income instruments. Monitor upcoming Eurozone inflation prints and ECB communications; consider trimming duration exposure and hedging sovereign risk.