By Kathleen Brooks, Research Director UK EMEA, FOREX.com

No one was expecting Germany to be the biggest loser today, especially since the Eurozone crisis has caused investors to flock to the safety of German bunds in recent months causing 10-year bond yields to drop to record lows.

However, that is exactly what has happened. Germany held an auction of 10-year debt today, however 35% of bonds were not sold. Berlin wanted to sell EUR6bn, but instead it could only sell EUR3.64bn, well below its target.

There are a few ways of looking at this:

The optimistic view: German bonds are at record highs (yields at record lows) and so are extremely expensive at this level. Although the number of buyers disappointed, the yields charged to hold German debt are still very low at 1.98%. This compares with nearly 7% for Spanish debt of a similar maturity.

The pessimistic view: Germany is being dragged into the fray, the longer the Eurozone crisis drags on the more likely Germany is going to be on the hook to bail out Europe's fiscally weak nations. Now that France has come under pressure and its triple A credit rating is under threat that leaves Germany as the only big economy in Europe left to pay for cleaning up this sovereign mess, which will inevitably weigh on Germany's finances in the long term. Since Germany already has a fairly high debt-to-GDP ratio of 83.10% at the end of 2010, its debt dynamics may not be as strong as some think.

An alternative view to the above is that the bond market is staging a buyers strike, essentially trying to push Germany to take action. If this crisis isn't dealt with in the near-term then bond investors will ditch all of the Eurozone, even Germany. The debt crisis has been escalating for years now and as Italy and Spain have been dragged into the fray this has become a chronic problem for the currency bloc. Germany has refuted attempts for closer fiscal unity in the currency bloc, which is considered the only way to truly solve this crisis, it has also opposed attempts to get the ECB to act as a lender of last resort like the Federal reserve in the US, which could boost confidence in Europe's bond markets. Thus, the effect of German belligerence in dealing with this crisis is today's failed auction.

It's a strange day indeed: as you can see in the chart below German 10-year bond yields (orange line) are rising while stocks are taking ? usually these two things move together....

The euro has tanked on the news and EURUSD is now below 1.3400. As we have said, we believe the break below 1.35 was key for this currency pair. Once it got below here it was likely to be a slow meander to the 1.3150 lows from early October, as you can see in the daily chart below.

The views expressed are the author's, not FNArena's (see our disclaimer).

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