Bonds: After the ECB comes the Fed
The ECB leaves key interest rates unchanged but surprises with its outlook. This affects bond prices. On Wednesday, the focus will be on the Fed. In the corporate bond segment, a bond from The Platform Group is coming under pressure.
25 July 2025. FRANKFURT (Börse Frankfurt). The European Central Bank (ECB) meeting dominated bond markets this week. It had been expected that key interest rates would remain unchanged for the first time since July 2024. However, the outlook came as a surprise. “Although ECB President Lagarde is keeping the door open for a further interest rate cut later in the year, she has indicated that there is no pressure to act for the time being,” summarizes Elmar Völker of LBBW. As a result, the yield on ten-year German government bonds rose to 2.75 percent after falling below the 2.60 percent mark on Tuesday.
“The mood has shifted somewhat,” notes Arthur Brunner of ICF Bank. According to him, the market currently estimates the probability of an interest rate cut in September at only 30 percent. “Before the ECB meeting, it was still 47 percent.” According to Ilona Korsch of Hauck Aufhäuser Lampe, the economic situation would have to “deteriorate significantly” for there to be a high probability of another key interest rate cut. Tim Oechsner of Steubing AG also believes that the cycle of interest rate cuts is “coming to an end” after eight steps.
Arthur Brunner
Fed meeting under political pressure
All eyes will be on the US Federal Reserve in the coming weeks. Two Fed members nominated by US President Donald Trump have recently expressed their openness to lowering key interest rates. “Judging by the tenor of other monetary policymakers, however, this remains a minority opinion,” write the strategists at Helaba, who therefore do not expect an interest rate change on Wednesday. Christian Reicherter of DZ Bank is bracing himself for a “controversial debate in the Federal Open Market Committee (FOMC).” However, because tariffs and their impact on future inflation and economic development remain a factor of uncertainty and the US labor market has so far proven to be “largely solid,” the Federal Reserve has “no rush to lower interest rates further.” Only a clear weakening of the US labor market in the fall could open up new scope for interest rate cuts.
Oechsner also believes that the Fed is currently “under no pressure to loosen monetary policy quickly.” Given the high level of economic uncertainty and the robust labor market, patience is clearly the order of the day. “Donald Trump is unlikely to like that,” adds the bond trader. The US president has recently made several critical comments about the central bank's “inaction” and publicly called out Fed Chairman Jerome Powell. Powell is officially in office until May 2026. According to information from Helaba, the political betting site “PredictIt.org” currently gives Powell's early departure in 2025 a chance of around 20 percent.
Tim Oechsner
Media reports cause selling pressure
On the Frankfurt Stock Exchange, Brunner reports “good sales” for a bond from The Platform Group (NO0013256834) that still has three years to run. Its price had risen fairly steadily over the past six weeks before selling pressure now emerged. The background to this is likely to be a very critical article in “Manager Magazin.” On the other hand, a high-yield bond from automotive supplier Booster Precision Components GmbH (NO0012713520) and a bond from ABO Energy GmbH & Co. KGaA (DE000A3829F5) are in demand.
Investors are also taking advantage of the lower prices of bonds from established companies to enter the market. “The preferred term remains unchanged at approximately three to five years,” Brunner specifies. As an example, he cites a bond from Volkswagen Financial Services (XS2152061904) that matures in 2028. The VW Group's profit warning at the end of the week has not yet had any impact on the bond's price.
By Thomas Koch, 17 July 2025, © Deutsche Börse AG
About the Author
Thomas Koch is a CEFA investment analyst, investment specialist for structured products, and certified certificate advisor. Since early 2006, he has been covering capital market events as a freelance journalist.
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