Germany is borrowing for 30-years at less than 0.75%
The rally in European sovereign debt has gone into overdrive since the ECB started its QE program yesterday. The impact is evident right across the curve but long-end yields are breathtaking with German 30-years down nearly a quarter of a point this week to 0.748%.
The ECB has said it will buy debt down to a yield of -0.20% and the market is taking that as an invitation. Five-year bobl yields are down to -0.11%.
At some point, real money isn't going to want to pay the German government for the privilege of holding its debt but it's not yet. In the meantime, ultra-low rates present the corporate carry trade of a lifetime as companies can issue bonds in euros at rock-bottom rates and covert to US dollars.
There is no reason to think the euro is anywhere near a bottom yet.
