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(Bloomberg) -- Germany is heading into 2025 facing a snap election, trade tensions with the US and a possible recession. For debt investors that’s a perfect recipe for another strong year of returns.

A Bloomberg Index of German bonds is on track to return 1.5% in 2024, outperforming US and UK debt for a second year in a row. Economic weakness will likely result in deeper interest rate cuts from the European Central Bank next year, which will be good news for German debt, analysts at JPMorgan Chase & Co. wrote in a recent note.

Here are four charts that outline the bullish case for German bonds.

Transatlantic Spread

Donald Trump’s election win spurred bets that US yields will stay higher for longer to account for a more expansive fiscal policy, while European rates will continue to fall. As a result, the premium investors demand to hold US 10-year notes over German debt is fast approaching its highest level since 2019.

“The US is in a much stronger position versus the Eurozone,” said Evelyne Gomez-Liechti, a strategist at Mizuho International Plc. “We expect the decoupling theme to remain during 2025 given the diverging fundamentals.”

London-Frankfurt Spread

UK bonds suffered in the wake of former Prime Minister Liz Truss’s budget in 2022, pushing the 10-year yield over German peers to the highest since 1990. The spread is nearing that level again, but this time Germany is the driver after its yield slumped almost half a point after the US elections.

Little Real Growth

Real yields, which strip out the inflation component from nominal debt and are a proxy for growth prospects, show the economic outlook for Germany is dim, making a case for more aggressive rate cuts. Whereas the US is surging ahead at almost 2%, German real rates are stuck in the middle of a narrow range of between 0.0% and 0.5%.

Dovish Bets

Money markets have amped up wagers on the scope for ECB rate reductions in recent weeks. Traders now anticipate almost five quarter-point reductions by the end of next year following last week’s cut. The Federal Reserve and Bank of England on the other hand are expected to lower rates just three times.