“Risk gauges in Germany‚Äôs government debt market rose last week to levels higher than recorded in the 2008 world financial crash, as margin calls forced the liquidation of derivatives positions held by banks, insurers and pension funds.

Big institutional investors that spent the past ten years insuring their portfolios against falling interest rates now face massive losses as hedges blow up. A key measure of market risk, the spread between German government bonds (Bunds) and interest rate swap agreements jumped above the previous record set in 2008.”

Analyst Comment: First the UK, now Germany. Credit crunch is hitting Europe hard and looks like it is coming soon to the US. The federal reserve will likely reverse rate hikes soon.

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