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16/04/2025 04:27 AST
As European money appears to be heading home from wobbling American assets, it's underwriting the region's entire fiscal expansion at no extra cost.
While that seems too neat to be true, the behaviour of European government bonds and the euro over the past month suggests the bloc may well be assuming some of the "exorbitant privilege" the United States has enjoyed for decades as a perceived safe haven and owner of the sole reserve currency. Thanks to Donald Trump's global trade war and broken Transatlantic alliances, a gigantic European continent of surplus savings may just be minded to fund itself rather than the increasingly unexceptional American economy.
Whether it draws additional savings from the rest of the world is yet to be seen, but some banks are now openly speculating about Europe attracting those safety seeking flows.
"Euro government bonds, especially German government bonds, could benefit from a risk scenario of shifting official sector demand away from U.S. Treasuries in a prolonged U.S.-led trade conflict," JPMorgan's debt strategists told clients this week.
Whether it draws additional savings from the rest of the world is yet to be seen, but some banks are now openly speculating about Europe attracting those safety seeking flows.
"Euro government bonds, especially German government bonds, could benefit from a risk scenario of shifting official sector demand away from U.S. Treasuries in a prolonged U.S.-led trade conflict," JPMorgan's debt strategists told clients this week.
Reuters
| Ticker | Price | Volume |
|---|
| Index | Closing | Change |
|---|---|---|
| NIKKEI 225 | 36,581.76 | -251.51 (-0.68 |
| DAX | 18,699.40 | 181.01 (0.97 |
| S&P 500 | 5,626.02 | 30.26 (0.54 |
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