Animal spiritis

Three months ago, Germany’s coalition collapsed under economic turmoil. Now, a seismic shift: a €900 billion borrowing plan, the biggest fiscal pivot since reunification. The constitution could be amended within days to loosen the “Schuldenbremse.”. Markets reacted swiftly—Bund yields surged 30bps yesterday, their largest move since 1990. A month ago, the 10-year Bund yield stood at 2.36%; this morning, it hit 2.79%. The euro is rallying above 1.08, while German stocks soar—MDAX surged 6.15% yesterday. For decades, Germany resisted fiscal expansion. Now, faced with a belligerent Trump and shifting US policies, it’s embracing a "whatever it takes" stance. A turning point has arrived. At ECP, we’ve maintained a tilt towards European equities and preferred shorter durations. But we will continue to adapt to this new reality in our client portfolios.