German bund yields could rise another 100 basis points from here, Goldman Sachs says

The euro is soaring alongside bund yields today after Germany unveiled proposals that would lift the debt brake and authorize major infrastructure and military spending.

Yields are up 25 basis points to 2.73% today but Goldman Sachs says that could jump to 3.75% in the medium term if the proposals are adopted.

One of the risks that’s growing is a global debt glut. Earlier today, China also boosted its deficit-to-GDP target for the year to 4% from 3%.

The US is talking about lowering the deficit but it’s also floating huge tax cuts, so we will see how that goes. On the corporate side, the US is trying to incentivize companies into huge capex plans, which will also be fuelled by debt.

This article was written by Adam Button at www.forexlive.com.