08/08/25 13:35:49

Bonds: “Bund yields within established range”

Discussions about the course of central banks continue – many now expect interest rates in the US to be cut in September. While yields in the eurozone are stagnating, short-term interest rates in the US have fallen significantly.


8 August 2025. FRANKFURT (Börse Frankfurt). Lots of movement on the stock market, little movement on the bond market – the trend from the previous week continues. “Yields are treading water,” reports bond trader Arthur Brunner from ICF Bank. Trading volumes are thin. “Investors are holding back due to geopolitical uncertainties.”

On Friday afternoon, the yield on ten-year German government bonds stood at 2.65 percent, down from 2.72 percent a week ago. “Yields on European government bond markets have fallen slightly again recently, but remain within the range of 2.6 to 2.7 percent that has been established for weeks due to the thin data calendar,” notes Commerzbank analyst Bernd Weidensteiner. “This is likely to continue next week, as there are few data points on the agenda in the eurozone,” he adds.

USA: Signs pointing to interest rate cut in September

In the USA, on the other hand, the latest inflation figures will be published next week. These could provide signals regarding the further development of key interest rates. “The markets are increasingly preparing for an interest rate cut in September,” explains Brunner. This is also reflected in the significant decline in yields on two-year Treasuries from 3.95 percent at the beginning of August to 3.73 percent now. According to Commerzbank analyst Weidensteiner, more and more US Federal Reserve members are shifting toward interest rate cuts following weak US labor market data. Two governors already advocated interest rate cuts at the last meeting. Now, three more have expressed concern about the situation on the labor market. 

Arthur Brunner

Arthur Brunner

Speculation also continues regarding interest rates in the eurozone. DekaBank does not expect any further cuts at the meetings in September and October. “At its council meeting on July 24, the ECB left key interest rates unchanged and raised the bar significantly higher for further interest rate moves,” explains analyst Joachim Schallmayer. The ECB is not expected to respond to slowing inflation and weak growth with another cut until December.

Mercedes, MTU, and UBM popular

In corporate bond trading, bonds from Mercedes-Benz (DE000A3LH6U5) and MTU Aero Engines (XS2887896574) are performing well, according to Gregor Daniel of Walter Ludwig Wertpapierhandelsbank. Both mature in 2031, with yields currently around 3 percent. The bond issued by Vienna-based real estate developer UBM Development (AT0000A2AX04), which matures in November and currently yields 5.53 percent, is also popular. The Otto bond, which matures in April 2026 and currently yields 2.52 percent (XS1979274708), is being bought and sold.

Gregor

Gregor Daniel

Formycon and SoWiTec lose

According to the dealer, however, the bond issued in July by biosimilar developer Formycon is on the sales list. It runs until 2029 and currently yields 9.35 percent (NO0013586024). “There is no news on this,” notes the dealer. Brunner reports purchases for Neue ZWL Zahnradwerk Leipzig with a maturity date in 2027 and a current yield of 8 percent (DE000A30VUP4) and Hörmann Industries with a maturity date in 2028 and a yield of 4.04 percent (NO0012938325). Meanwhile, bonds issued by renewable energy project developer SoWiTec maturing in 2028 and currently yielding 15.2 percent (DE000A30V6L2) have come under pressure. 

Successful increase at Katjes

The new issue market is quiet due to seasonal factors. Katjes International successfully increased its existing corporate bond maturing in 2028 (NO0012888769) by 70 million this week, as reported by ICF trader Brunner. The funds will be used to finance the 60 percent stake in Willy Bogner GmbH. “If the deal fails, the increase will be repaid,” explains Brunner. The new tranche will be temporarily listed under a separate ISIN (NO0013627927) and merged with the existing bond upon completion of the Bogner transaction, expected in the first half of September. The “old” bond is currently trading at 106.45 percent. 

By Anna-Maria Borse, 8 August 2025, © Deutsche Börse AG

Anna-Maria Borse is a financial and business editor specializing in financial markets/stock exchanges and economic issues.

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