The Federal Reserve on cut interest rates today, the third time since July. Chairman Jerome Powell says that they are likely done, for now. The federal funds rate is now at 1.50-1.75%, still a lot higher than the 0% of the European Central Bank, though.
Germany’s 10-year Bund yield is now at -0.35% (up from a record low of -0.61%), showing that investors there are still desperate for safe assets. They are really not confident about the economic prospects of the Eurozone. Besides, Germans tend to hoard money in savings, instead of investing it.
‘How Germany Saves: The Federal Republic counts under the richest countries in the world. Even so, the average person benefits little from that.The problem: Germans hoard money, instead of investing it’. The donut at the bottom shows that Germans keep an astonishing 39.7% of their money in cash and deposits. Another 37.3% goes to ‘Versiecherungen’ which I believe would be capital life insurance policies or pension plans. Equities and equity funds: 8.7%. What do Germans save for (bottom right)? 23% Old age care/ insurance, 20% Emergency funds, 12% General purchases, 7% Discretionary spending, 6% Vacation & Travel, 4% Buy or Build a House, 3% Buy a Car, 3% Children or Family. [Source: Der Tagesspiegel newspaper online]
