Year: 2025
Type: article
Abstract: "We document that German inflation-linked government bond yields contain a convenience or safety premium averaging 0.33 percent. Despite that, the German Federal Finance Agency decided to cease all future issuance of these bonds in November 2023. We examine the market response to this announcement and find that neither the safety premia nor the trading conditions of these bonds have been negatively impacted. Hence, this bond market remains a rich source of information on real rates in the euro area in addition to offering investors a safe inflation-protected asset.
DOI: 10.24148/wp2025-03
Authors: Federal Reserve Bank of San Francisco, Jens H. E Christensen, Sarah Mouabbi, Banque de France, Caroline Paulson, Federal Reserve Bank of San Francisco
Institutions: Federal Reserve Bank of San Francisco, Banque de France
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4407168246