MERZ CUTS A DEAL, MARKETS THROW A PARTY—FOR NOW
Germany’s soon-to-be Chancellor, Friedrich Merz, and the Greens shook hands on a massive borrowing spree ahead of a key vote next week.
Investors popped the champagne early, sending the German stock exchange index up over 2%, while mid- and small-cap stocks jumped more than 3%.
The euro flexed up 0.5% to $1.0904, and Germany’s 10-year bond yield climbed to 2.93%, as markets bet big on government cash injections.
But some analysts are already side-eyeing reality, warning that Germany’s bureaucracy moves at a glacial pace, meaning growth won’t see a boost anytime soon.
Meanwhile, borrowing costs are expected to climb, and some predict the euro will take a hit later when U.S. tariffs come knocking.
Enjoy the market rally while it lasts.
Source: Reuters
