A MarketWatch article from yesterday provides an overview of the future of bunds. The article said that while the safe-haven appeal of German government bonds seems to be fading, it's not likely to disappear:
The yield on 10-year German government bonds, or bunds, traded near 2.72% on Thursday after rising earlier this week above 2.75%. Bond yields fall as prices rise and vice versa.The yield bottomed out below 2.5% in early June, as investors sought a safe haven from worries over Greece's huge budget deficit and its ability to pay its obligations. Fears escalated that Athens' woes would soon spread to other fiscally challenged euro-zone governments. Eventually, yields rebounded as fears of an imminent default faded.That was followed this week by significant unwinding of bearish bets on peripheral euro-zone government bonds. The yield premiums demanded by investors to hold the paper issued by troubled countries over German bunds narrowed significantly, but remain elevated.Fading hopes of European economic outperformance would make bunds a buy relative to Treasurys if 10-year German and U.S. yields are near par, said strategists at Standard Bank. The 10-year U.S. Treasury yield was seen at 3.00% on Thursday.
