It was a week of confirmed interest rate hopes. Both the head of the US Federal Reserve and the head of the ECB encouraged investors that key interest rates would soon fall. The news that Depfa intends to pay interest due was welcomed.
8. March 2024. FRANKFURT (Börse Frankfurt). The interest rate cuts are coming, albeit not quite as quickly as expected weeks ago. The tenor on the market is that the time will come in early summer. "In our opinion, the first interest rate cut in the eurozone will take place in June, as wage developments play an important role for the ECB, and data on the first quarter will not be available until mid-April," says analyst Ralf Umlauf from Helaba.
Yesterday, Thursday, the ECB - as expected - kept its feet still. The head of the central bank, Lagarde, referred to the progress made in the fight against inflation. However, she was not yet "sufficiently certain". "We clearly need more evidence, more details," explained Lagarde. More information will be available in June.
There were no major market movements after the ECB meeting. In a weekly comparison, however, yields have fallen: ten-year German government bonds were yielding 2.27 percent on Friday morning, compared to 2.45 percent a week ago. Ten-year US Treasuries are currently yielding 4.07 percent after 4.19 percent last Friday. The US Federal Reserve has also fueled speculation of interest rate cuts this week. Federal Reserve Chairman Jerome Powell hinted at an imminent turnaround in interest rates before Congress.
"In the shadow of the DAX, Bitcoin and gold"
There is currently no clear trend in corporate bond trading. "Bonds are currently overshadowed by the DAX, Bitcoin and gold, which have all reached new all-time highs," notes Arthur Brunner from ICF Bank. According to Brunner, the Mutares bond (NO0012530965), which matures in 2027 and is now trading at 106 percent, is in high demand. This results in a yield of 10.6 percent. The investment company announced the sale of another portfolio company this week. The bond issued by wind farm operator Encavis (DE000A3MQE86) rose sharply from 81 to 88.5 percent. "The US financial investor KKR is getting on board and it is now expected that the convertible bond will be repaid early," explains Brunner.
"It's a mixed picture with buying and selling and very different debtors," reports Gregor Daniel from Walter Ludwig Wertpapierhandelsbank. Agon Alihajdari from Steubing AG reports good turnover for US dollar bonds from John Deere with 4.7 percent until 2039 (US24422EWZ86) and bonds from VW maturing in 2031 (XS2694874533) and SAP until 2027 (DE000A13SL34). The yields are currently 4.55%, 3.69% and 2.45%.
Breathe a sigh of relief regarding Depfa
The shares of Deutsche Pfandbriefbank (Depfa) have recovered, as Daniel reported, especially the hybrid bond (XS1808862657). Depfa does not intend to pay a dividend, as it announced yesterday (Thursday). However, the hybrid bond is to be serviced. Other Depfa bonds (XS1637926137, DE000A2DASM5) are also benefiting, according to Rainer Petz from Oddo BHF. According to Brunner, however, the bond issued by commercial real estate investor Publity (DE000A254RV3) lost around 10 percentage points. The reason: a net loss of 237 million euros for 2023.
"There were a lot of new issues this week, but most of them with denominations of 100,000 euros," Daniel also notes. In contrast, the new floater from Rhineland-Palatinate has a denomination of 1,000 euros. It runs until 2026 and offers a coupon of 3.879 percent (DE000RLP1460).
By Anna-Maria Borse, March 8, 2024 © Deutsche Börse AG
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
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