Germany's election sparks market reactions as spending expectations rise

Germany is facing a crucial election that may lead to increased government spending. Markets are reacting to the possibility of a shift away from strict fiscal policies, with expectations that the center-right CDU/CSU alliance could form a coalition. Investors are concerned about potential outcomes, including a strong performance from far-right parties. The election results could influence Germany's borrowing limits, which have been in place since 2009, and impact the broader European economy. German bonds have declined, particularly longer-term securities, while the DAX stock index has reached a record high. Defense stocks are expected to benefit from any changes in fiscal policy, with analysts predicting significant increases in their valuations.