Bonds: “Risk aversion has increased”

Positive trend for Euro Bund futures

“Risk aversion has increased on the financial markets,” states Ralf Umlauf from Helaba. Ten-year bonds have now “reached a level at which buying interest has repeatedly waned recently.” It remains to be seen whether the headwinds will become stronger in view of the increased risk aversion. In his opinion, German government bonds, which are considered safe, are likely to remain in demand in any case. The benchmark Euro Bund Future is currently trading at 131.20 points, up from 127 points in March. Umlauf emphasizes that the price barometer for German bonds “is holding up well above the 21- and 55-day lines.” From the perspective of bond bulls, it is now important to sustainably exceed the contract high of 131.85 points marked in April. The above-mentioned average lines at 130.60 and 130.40 points would provide support on the downside.

The week before, yields had risen slightly more sharply after the European Central Bank (ECB) dampened hopes of further cuts in key interest rates. Klaus Stopp of Baader Bank believes that the ECB will indeed take a break for the time being. With the inflation target achieved, the central bank can now breathe a sigh of relief. “We should let the interest rate measures take effect first,” explains the experienced bond trader. The US Federal Reserve also appears to be adopting a wait-and-see attitude, even though the US “normally still has room for manoeuvre” with regard to inflation. However, the markets are currently pricing in the fact that the Fed wants to wait and see how the political situation develops.

Will the Fed respond to Donald Trump?

Robert Greil also expects the US Federal Reserve to continue its pause mode at its meeting next Wednesday. “The Fed will once again not give in to Donald Trump's pressure for the first US interest rate cut this year,” suspects the chief strategist at Merck Finck. Due to the lack of numerous “trade deals,” the central bank still lacks an essential piece of the puzzle to be able to truly assess the future inflation trend. On this basis, the strategist does not expect the Fed to cut interest rates again at its meeting at the end of July. “It will probably only happen at the September meeting.” US President Donald Trump had once again called on Fed Chairman Jerome Powell to cut interest rates and considered that he might have to “force something.”

Blue chip bonds are being purchased

When trading corporate bonds, investors on the Frankfurt Stock Exchange primarily purchase securities from large German corporations. The bonds being purchased are primarily those of Deutsche Lufthansa (XS2892988275), Deutsche Post (XS2644423035, XS3084418907), Deutsche Telekom (XS2987630873), E.On (XS2574873266), and Mercedes-Benz (DE000A2YNZW8, DE000A3LH6U5>), as reported by Beate Mägerle of Walter Ludwig Wertpapierhandelsbank.

By Thomas Koch, 13 June, 2025, © Deutsche Börse