Angela Merkel’s Germany Faces Problem of a Domestic Bond Bubble

As bonds continue to yield historically low levels of return many are driven to wonder if there is in fact a distortion in the bond market driven by fears of a collapse in the equity markets. The ongoing struggles of the European Union, coupled with the United States’ debt burden and the possibility of a contraction in China have driven investors toward bonds as a safe investment alternative.

The severe lows in yields of those bonds considered safe, most...