21/03/25 11:47:10

Bonds: “Financial package completed on the market side”

The excitement surrounding special assets and the easing of the debt brake has subsided somewhat. Yields have fallen again. However, there is a lot of excitement in Turkey. 


21. March 2025 FRANKFURT (Börse Frankfurt). The rapid rise in yields is over. Instead of the multi-billion euro financial package, the focus is now back on US tariffs and the potential impact on Europe's economy. The decision of the Bundesrat on the amendment to the Basic Law on the debt brake is still pending today, Friday. Approval is expected. “However, the issue seems to have been dealt with on the market side and the adjustment of yield levels has come to a standstill,” notes Helaba analyst Ulrich Wortberg. “Only a rejection by the Federal Council would probably have significant consequences for the financial markets, and also for growth prospects.”

The yield on ten-year German government bonds has fallen this week and stood at 2.76% on Friday morning. With the announcement of the package two weeks ago, yields had risen faster than at any time since the 1990s. At its peak, it was over 2.93 percent. The reason: the expectation of many new federal bonds, for which higher risk premiums would then be demanded. “The plans of the CDU/CSU and SPD have stirred up a lot of dust on the bond market and caused yields to rise significantly,” says Commerzbank analyst Hauke Siemßen. Following the Bundestag's approval on Tuesday, however, this dust has settled somewhat.

US Federal Reserve stands still

The US Federal Reserve left key interest rates unchanged on Wednesday this week - for the second time in a row. The updated projections indicate two more interest rate cuts this year. However, the central bankers emphasized the current unusually high level of uncertainty. “The decline in inflation has recently stalled,” notes Tim Oechsner, who trades bonds for Steubing AG. US President Trump is unsettling the economy and markets. “The aggressive tariff policy could drive up inflation.”

The ECB is also unwilling to commit itself at the moment: ECB President Christine Lagarde explained yesterday (Thursday) that the central bankers are currently unable to make any firm forecasts. 

Oechsner

Tim Oechsner

Turkey: Price slump used for entry

The arrest of Istanbul's mayor and Erdoğan opponent Imamoğlu triggered severe turbulence on the Turkish capital markets this week. The Turkish lira fell to an all-time low, the stock market collapsed, as did bond prices. “Here, however, this is seen as a buying opportunity for bonds in Turkish lira,” reports Gregor Daniel from Walter Ludwig Wertpapierhandelsbank. One example: the lira bonds of the European Bank for Reconstruction and Development (XS2756383233), which have also been popular in recent months.

According to Oechsner, there is a lot going on in government bond trading in US Treasuries maturing in 2053 (US912810TV08) and Romanian bonds maturing in 2035 (XS1313004928). The yields are currently at 4.64 and 6.17 percent. 

Gregor

Gregor Daniel

Lufthansa, Fresenius and Telekom in demand - news from Swiss Post

Business with corporate bonds is a little quieter this week, as Daniel observes. He sees good demand for Deutsche Lufthansa bonds maturing in 2028 (XS2892988275), Fresenius 2030 (XS2482872251) and Deutsche Telekom 2032 (XS2987630873) with current yields of around 3 percent. Oechsner reports good turnover for Toyota bonds maturing in 2028 (XS2972972017), RCI Banque bonds maturing in 2027 (FR001400P3D4) and Mercedes bonds maturing in 2029 (DE000A2GSCW3). These are currently yielding 2.74%, 2.97% and 2.71% respectively.

There is news from Deutsche Post, among others, as Rainer Petz from Oddo BHF reports. One tranche runs until 2030 and offers 3 percent (XS3032045471), another until 2034 and 3.5 percent (XS3032045554) and the third until 2040 and 4 percent (XS3032045398). The minimum investment amount is EUR 1,000 in each case. 

By Anna-Maria Borse, 21. March 2025, © Deutsche Börse

Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.

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