SCHATZ introduction and background |
Schatz are German government bonds with 1.75 to 2.5 years until expiry. Schatz rates reflect investor influence in German government debt in the immediate future and represent the short-term obligations of the German state. Like most German state debt, Schatz typically trade at low yields and elevated prices, as the German government is considered one of the most financially stable major economies.
The medium and long-dated equivalents of Bunds are the BOBL and Bund. During the lifecycle of a ten-year bond the same security will pass through a period as a Bund, BOBL, and Schatz. Investors may hold these bonds as low-risk cash equivalents or trade them in anticipation of price increases. Schatz are often held as a cash equivalent due to their low risk profile.
The yield of Schatz is determined by the financial standing of the German state and general investor confidence. As a safe-haven asset, Schatz may see price increases during times of general market volatility, depressing their yield.
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