Pimco becomes negative on German bonds before spending vote

Pimco has become more negative on German government bonds as the country prepares for increased public spending. Fund manager Sachin Gupta has reduced investments in bunds, anticipating support for Chancellor-elect Friedrich Merz's spending package. The yield on 10-year German bonds has risen sharply this month, reaching its highest level since 2023. This increase follows Germany's decision to shift from fiscal conservatism, impacting bond markets across Europe. Traders are adjusting their expectations for interest rate cuts from the European Central Bank due to potential economic boosts from increased defense spending. The yield on 10-year German notes fell slightly to 2.82% on Monday.