I think about German FI market differently from researchers in brokerages.

2018.7.30
German 10y G-bund
Closed at 0.403% (-0.001%) Target to 0.600% (+0.197%)
Indices
German 2y G-bund -0.599% (0.004%)
US 10y T-Note 2.9542% (+0.0222%)
Japanese 10y G-bond 0.104% (+0.010%)
EuroStoxx50 3,527 (+0.51%)
1. Decision of ECB don’t bring plunge to the security. Research analysts in banking industry expected that the yield will be entering to steep increasing stage when ECB makes decision for future of their Quantitative Easing policy, and the most of them expected the bank could make the decision at June, this year. As they expected, the bank made decision. But yield didn’t go in their way. The yield has risen to 0.4% level like graph above, with a kind of Taper-Tantrum from Japan, and messages from US Fed.
2. Hyper-low level of rate will be preserving for much longer time than the researchers expected. I believe the 10y bund will not touch 1% until June, next year. In real, effect of QE could be even bigger when central bank ended their policy like that of US’s did during 2015. Let see a precedent of the United States. Everyone in the market anticipated that Fed would end the policy at end in the year at 2014, and the anticipation came up in real. Ban Bernanke, who was charge of operating the policy at the time, was very sensitive to reaction of the markets, and the market yield had been preserved in enough low-level. Even in end of 2015, yield of 10y T-Note was much lower than it was during 2014 when the largest purchase from Fed was proceeding in the market. Even after end of the policy, injections of cash to the market have been continued with re-investment of interest revenues from its reserve of the securities. And the institution has preserved dovish stance for the market until regional real-economy shows sign of enough economic expansion, even over-heating. Looks like there would be no different for ECB. Mario Draghi, ECB president, has been preserving the most dovish stance, as much as Mr. Bernanke did. His chair will end at Oct, 2019. It’s not sure who will take the chair when Mr. Draghi step back from the office. But until time of replacement, the bank will keep showing dovish stance to the market, and the strongest re-investment with interest revenues from the securities it will hold. I believe the movement will limit bearish movement in the market. Besides, when the bank starts to raise policy rate of the zone is in the question. The market participants expect it would be next summer, about August, 2019. But the decision about the rise is too far to reach in now for the members of ECB. They need to handle Tapering problem right now, and the opinions about it are too various even among the members.
3. I believe the yield could touch 1% at worst. But it will be temporary. My first target for the yield is 0.6% considering bearish movement of global FI markets. Unless the chair is replaced or policy rate is adjusted, I believe the 1% yield in the security couldn’t be retained. My band for the yield is 0.3 ~ 0.8 until Summer, 2019.
Mr. Banker, http://markety.tistory.com

 

German 10y Government bund (July 30, 2018).pdf