Odd Lots We Just Saw Europe's Biggest Week in Decades
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Mar 7, 2025 George Saravelos, Head of currency research at Deutsche Bank, dives into Europe's significant shake-up with up to €800 billion in defense spending and relaxed debt rules in Germany. He discusses how these moves affect the euro and dollar amidst rising tariffs from the U.S. and a shifting political landscape. Saravelos also shares insights on market reactions, cautious optimism among corporate leaders, and the broader implications for global economic ties, highlighting the transformative moment for Europe and its financial future.
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European Market Surge
- Germany's 10-year Bund yield saw its largest one-day jump since the fall of the Berlin Wall.
- The Euro, European defense stocks, and the DAX are also rising.
Historic Shift in European Policy
- Europe's recent policy changes, including increased defense spending and easing of debt rules, are historically significant.
- These changes are comparable in scale to German reunification, potentially boosting growth and the euro.
Munich Security Conference Trigger
- The shift in European policy is driven by both the scale and speed of change.
- The Munich Security Conference was a pivotal moment, significantly altering the political climate in Germany.