Update: Well that didn't last long... Germany's finance minister confirmed to Bloomberg via phone that Germany has made no decision to give up a balance budget.
Stocks are back down...
And Bund yields are sliding back...
Who could have seen that coming?
Germans, Europe's most frugal population, will somehow agree to raise debt to fight climate change. Good luck with that— zerohedge (@zerohedge) August 8, 2019
This was Lagarde's first attempt at floating some ridiculous "noble" debt issuance cause behind which Germans would rally. She failed— zerohedge (@zerohedge) August 8, 2019
* * *
Bund yields (and Treasury yields) and stocks have spiked in the last few minutes following headlines from Germany's Der Spiegel that the government is proposing a €500 MM debt deal to fund climate protection, as part of Germany's U-turn on its long cherished balanced budget goal by issuing new debt to finance a costly climate protection package.
Development Minister Gerd Müller demands more financial resources for international climate protection.
"There is less and less time to achieve the goals of the Paris Agreement, and in Germany we must increase our efforts and invest an additional 500 million euros in international climate protection next year," the CSU politician told SPIEGEL.
“The challenge now is how to shape such a fundamental shift in fiscal policy without opening the flood gates for the federal budget,” a senior government official told Reuters, clearly realizing that this idea has virtually no chance of broad adoption by the frugal German population.
“Because once it is clear that new debt is no longer a taboo, everyone raises a hand and wants more money,” the official said. That’s why Berlin would link and limit any new debt strictly to the climate protection package which Chancellor Angela Merkel’s cabinet is expected to seal next month.
The money should come either from the National Climate Fund or from the federal budget, the minister said.
"This will enable us to finance an innovation and investment offensive for climate protection measures in Africa and, among other things, to strengthen international agricultural research," said Müller.
More debt, more wasted spending, more fiscal irresponsibility - buy stocks, sell bonds!
Yields are spiking...
As are stocks...
However, FX Macro sums things up well...
https://t.co/bUC244PsdX if this is the story its a nothing BURGER!— FxMacro (@fxmacro) August 8, 2019
What would you do if you raise debt at minus-50bps?? This is sheer insanity - MMT is here and Draghi/Lagarde will do more of the same til it all explodes.