Lowest sentiment for the Bund future since March 2012

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sentix Sentiment for the Bund future falls to its lowest level since March 2012 when the Greek debt was restructured. In the past such a bad sentiment among investors subsequently has led to a rise in the Bund future. This time, too, we interpret the extreme reading as a contrarian signal!

This week sentix Sentiment for the Bund future – polled via the latest sentix Global Investor Survey – collapses. Its current reading of -32% is as low as it last was in March 2012. That was the time when Greece was restructuring its debt held by private investors (so-called “private sector involvement”), and when German government bonds benefited heavily as safe-haven investments (see graph).

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In the past such an extreme pessimism among investors was usually the starting point for a rally in the Bund future. And we also interpret the current sentiment low as a contrarian signal, all the more as other sentix data show that investors’ basic conviction for the Bund future is again on the rise. Consequently, the Bund future should show some strength in the weeks to come – once more at a time when Greek government finances are at the crossroads.

Background

sentix Sentiment, investors’ 1-month expectations for a given market, is polled on a weekly basis since 2001 as part of the sentix Global Investor Survey. It reflects the emotions – between greed and fear – of market participants. Negative sentiment extremes are usually a straight indication for rising prices. High optimism, in contrast, may be a warning signal for an upcoming market consolidation. More important turning points are mostly indicated by a sentiment divergence.

The current sentix Global Investor Survey was conducted from June 4th to June 6th, 2015. 926 individual and institutional investors took part in it.

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