Traders increase bets on a sell-off in European bonds

Investors are showing more signs of worries. Over the past two weeks, option bets on selloff bonds in Germany have tripled.

Goldman Sachs Group Inc. and BNP Paribas SA expect German yields to rise to 2.75% in the first quarter. That is the highest level in more than ten years.

On Thursday, there should be a meeting of the ECB. After that, investors wait for information on how to reduce the balance of bonds, amounting to 5 trillion euros ($5.3 trillion). Despite the gradual approach in the way of stopping reinvestments from expired bonds, according to politicians, the market will still see a boom in sales of government bonds.

The main condition for this were programs to protect consumers from the cost of living crisis. Compared with previous years, ECB bond purchases will no longer support the market.

According to forecasts by strategists at Commerzbank AG, the offer of bonds in Germany will reach 270 billion euros next year. This is a record level since 2010, so investors' demands for yields could rise, including economically strong countries.