Maybe you are just thinking about this the wrong way. I'll give you quick and dirty traders' view on why these bonds might be rallying above their derivable discounted forward coupon payments and redeemable value. So, the bunds are trading above their net present value, fine. Here is a list of possible explanations. (1) Global speculators are front running ECB action (their buying bunds to get paid when drahgi buy em later) (2) There are laws and regulations in place preventing alternative investment. Who knows what this could be there are so many stupid rules and reg's in EU that it would take a lifetime to figure out this mess Basell II and III, MiFiid II and MiFIR, EFSF and ESM, Outright Monetary Transactions (OMT) The bottom line is that the Eurozone banks are trying like hell to get out of a funk and they are HEAVILY laden with debt both non-performing and debt in need of restructuring. This is a bonanza for the investment banks. (Bullish for US bank stocks) (3) Maybe we are reaching a point of debt saturation in EU real estate? Maybe the yield spread on Eurozone real estate vs commercial paper has topped and will start narrowing. This would be bullish for eurozone debt and would contribute to preventing bund weakness. Bearish for EU bank stocks, and Eurozone banking index products. In the US, the corporate, residential, and commercial paper market can absorb huge amounts of funds from cash treasuries. RE credit instruments can absorb oceans of fund proceeds from liquidated cash treasury positions, and actually produce a favorable return. Maybe there will be a new crisis in EU RE valuations. Maybe the strength in bunds is due to weak inflation expectations and cross border investment aversion due to perceived credit risk. In other words, cash isn't moving down the capital structure into the riskier debt instruments for fear of contagion risk! Kind of like the Euro debt crisis just papered over the problem and everybody knows it! So, now the countries are gonna limit exposure to each others balance sheet and credit risk! That would be funny. If the banks are not willing to expose themselves to international credit risk in the EMU then more easing will be needed and so bullish for bunds!