Wednesday saw a dramatic selloff in German governmentbonds, with the yield on Deutschland's 10-year debtjumping from 0.1005 percent to as much as 0.1641percent in the course of a single trading day. Bill Gross, thebillionaire bond manager who had just on Tuesday declaredGerman bunds “the short of a lifetime,” must surely bepleased.

Deutsche Bank strategist Jim Reid has some thoughts:

… [The] move may well have been the second largest onrecord now, with yields now more than doubling from the lows onMonday of 0.075%. The move in Gilts was also pretty sizable tooafter a hawkish set of BoE minutes with 10 year yields climbing+14.7bps to 1.713%—the worst single-day yield move since 28thAugust 2013. With regards to the Bund story there doesn't seem tobe one key driver and it seems to be due to a combination of 1) theBoE-led Gilt move, 2) the big rally in Greece yesterday reversingsome flight to quality trades and 3) perhaps some follow on fromBill Gross's tweet on Tuesday that Bunds were 'the short of alifetime' better than the pound in 1993 and that the only questionis timing/ECB QE.

As of Thursday, the yield on the benchmark 10-year bund ishovering around 0.42 percent.

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