BlackRock (BLK) is increasing bearish bets on German government bonds, citing expectations of a renewed inflation surge across Europe and rising fiscal spending pressures, Bloomberg reported Thursday.

Tom Becker, manager of the firm's $6.5 billion Tactical Opportunities Fund, told the news outlet that the fund has expanded short positions in five-year and 10-year German bunds and was already short 30-year maturities, the report said.

Becker said European governments are likely to increase spending to cushion households from higher energy costs and boost military capacity following the recent conflict involving Iran, which could increase bond supply and push yields higher, the report said.

He expects Germany's 10-year yield to move above last week's 3.13% high, the report said.

Becker also warned markets may be underestimating the scale of Europe's policy response to energy-security needs ahead of winter, which could further widen deficits similar to subsidy-driven spending during the Ukraine war period, the report said.

BLK did not immediately respond to MT Newswires' request for comment.

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