Bonds: security no longer so important
In view of the party mood on the stock markets, German government bonds are no longer convincing. However, bonds issued by major DAX companies such as Mercedes, FMC, VW and Eon continue to do well.
16. May 2025 FRANKFURT (Börse Frankfurt). As the DAX continues to climb to new highs, “safe havens” are no longer the first choice. Week-on-week, however, yields are more or less unchanged. “Recently, it has been more political events and, in particular, hopes for agreements in trade disputes with the USA that have caused movement,” notes Helaba analyst Ralf Umlauf. After the tariff agreement with China last weekend, however, there was no news. “Meanwhile, there is no reason to believe in a quick peace settlement in the Ukraine war.”
The yield on ten-year German government bonds reached 2.69 percent over the course of the week. On Friday morning, it was 2.58 percent - the same as a week ago.
Interest rate cuts: Eurozone yes, USA uncertain
Due to the decline in inflation in the eurozone, the market is firmly assuming that the ECB will cut interest rates further. “As the labor market is holding up well and inflation is close to the ECB's target, I expect the ECB to cut key interest rates by a further 0.25 percentage points in June and July,” explains Tim Oechsner, who trades bonds for Steubing AG.
Tim Oechsner
The situation in the US is less clear: US consumer prices did not rise as much as expected in April, as was announced on Tuesday of this week. However, the market is now expecting inflation to rise due to the continuing increase in tariffs. “Together with the other tariffs, the average tariff for all US imports should now amount to around 17%,” explains Commerzbank analyst Bernd Weidensteiner. This is less than was feared in the meantime, but still a drastic increase compared to less than 3 percent before Trump took office. “This will have an impact on the inflation rate in the coming months.”
For trading in government and government-related bonds, Ochsner reports good turnover in Portugal bonds maturing in 2032 (PTOTEYOE0031) and the European Stability Mechanism ESM maturing in March 2026 (EU000A1U9944), which are currently yielding 2.49 and 1.81 percent respectively.
Mercedes, FMC, VW, Eon - familiar names are on the move
In the corporate bond business, the “old acquaintances” continue to be popular, as Gregor Daniel from Walter Ludwig Wertpapierhandelsbank puts it. One example is the Mercedes-Benz bond maturing in 2031 (DE000A3LH6U5). New to the list: Fresenius Medical Care maturing in 2028 (XS3036647694). Yields are currently around 3 percent.
Gregor Daniel
“The perennial favorites are in demand,” explains Steubing trader Oechsner. He cites VW bonds maturing in 2031 (XS2694874533), Eon in 2029 (XS2673536541), Siemens in 2028 (DE000A1UDWN5) and Deutsche Post in 2036 (XS2784415718) as examples. At current prices, the yields are 3.63%, 2.62%, 2.03% and 3.53%. Arthur Brunner from ICF Bank reports good turnover in the new bond from Berlin-based financial services provider Smava. This has a variable interest rate and runs until 2029 (NO0013531590).
News from BMW
As uncertainty decreases, many companies are venturing back onto the market with fresh bonds. “There were lots of new issues,” reports Brunner. New issues this week included VW - albeit with denominations of 100,000 euros - and BMW with 1,000 euros. The BMW bond maturing in 2031 with a coupon of 3.25 percent (XS3075490188) has been trading at Walter Ludwig since today, as Daniel reports. There is also a tranche until 2034 with a coupon of 3.75 percent (XS3075490261) and 2028 and 2.625 percent (XS3075491152).
Arthur Brunner
Homann Holzwerkstoffe today narrowed the interest rate range for the new corporate bond (NO0013536169), which matures in 2032, to between 7 and 7.5 percent, compared to the previous range of 6.5 to 7.5 percent, as Daniel also explains. The subscription period ends next Monday at 12.00 noon.
By Anna-Maria Borse, 16 May 2025, © Deutsche Börse
About the Author
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
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