Germany warns against celebration

Germany’s top finance officials warned investors against prematurely celebrating an overhaul of Europe’s economies four years after they plunged into crisis.

“It’s good that markets have become more confident again,” said finance minister Wolfgang Schaeuble at the spring meetings of the International Monetary Fund. “But I’ve said that in parts they’re already exaggerating again.”

Bundesbank president Jens Weidmann said “there’s a discussion about a stability risk that’s created by financial markets in a certain way running ahead of adjustment processes.”

The call for caution came the same week Greece returned to debt markets for the first time since 2010 in another sign the crisis which raised doubts over the euro’s existence has ended. The bonds of Europe’s higher-yielding nations have surged as investors returned to markets they shunned during the turmoil.

“It has to be clear that the successes we’ve had must not lead us astray,” Schaeuble said. “We’re on the right track but it has to be continued. In every human society, complacency is one of the great dangers.”

Weidmann said “doubts about the implementation of promised reforms could lead to a re-evaluation that could materialise in higher risk premia”.

Greek bonds returned 32% this year through April 10, according to Bloomberg World Bond Indexes, the best performer among eurozone sovereign debt markets. The country sold €3 billion of five-year notes via banks on April 10, receiving about 600 orders, for a total of around €20 billion, according to a person familiar with the sale. Its 10-year bond yield fell on April 9 to as low as 5.80%, the least since February 2010.

Elsewhere in the region, Italian bonds have gained 6.1% this year with the rate on the 10-year security dropping on April 7 to 3.14%, the least since Bloomberg started collecting data in 1993.

For all the relief, Dutch finance minister Jeroen Dijsselbloem said in an April 10 interview in Washington Greece may need another round of international aid depending on how conditions look in a few months.