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The Euro Bobl is a medium term bond issued by the Federal Republic of Germany. It is abbreviated from Bundesobligationen, and is available to trade as a spread bet, CFD, future or options contract. Eurobobl are issued with a maturity date of between 4.5 and 5.5 years. They represent the price of the medium term debt of the German government.

It is important to stress that the debt of other governments in the eurozone is treated differently than Germany’s. The German economy is the largest in Europe, but the price of Germany’s debt is no longer as closely correlated to other euro-denominated sovereign bonds. Euro bobl are only issued by Germany, and not other eurozone countries.

Key Economic Factors of the Euro Bobl

Key economic factors influencing the price of Bundesobligationen relate primarily to Germany’s economy. Although eurozone interest rates are set by the European Central Bank, Germany carries out its own bond auctions. Many analysts use the difference in the yield between German benchmark bonds like the Eurobobl and its other eurozone equivalents as a relative measure of the health of other eurozone economies.

Investors in Germany’s public debt will focus on areas like balance of trade, business confidence measures, unemployment, and key policy speeches. The Business Confidence Index published by the Ifo think tank is a popular benchmark for watchers of Germany’s economy. While comments from the governor of the European Central Bank are important, any public discussions by Germany’s finance minister are also critical.

Like many other European countries, Germany relies heavily on institutional investors to take up much of the public debt it auctions, and is less reliant on overseas investors than, say, the USA. Unlike the euro, the euro bobl is a direct play on the strength of the Germany economy alone, while the euro currency is an aggregate of the relative strength of the Eurozone economies.

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Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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