The fact that price pressure in the eurozone and Germany is easing more than expected has led to lower yields on the bond market. The weak US dollar also makes dollar bonds attractive.
1 Dezember 2023. FRANKFURT (Börse Frankfurt). Such a sharp fall had not been expected: The inflation rate in the eurozone fell to just 2.4 percent in November. The rate in Germany also fell significantly, from 3.8 percent to 3.2 percent. The market's interpretation is that further interest rate hikes are unnecessary. Yields have gone into reverse gear. The first interest rate cuts by the ECB have now been priced in by the markets.
Arthur Brunner, who trades bonds for ICF Bank, speaks of a "week full of optimism" with regard to inflation and interest rates. "The markets on both sides of the Atlantic are in interest rate cut euphoria," says analyst Ralf Umlauf from Helaba. In addition to the fall in inflation, weaker economic data also contributed to this. The yield on ten-year German government bonds fell to 2.4 percent, on Friday morning it was 2.42 percent. A week ago it was still 2.66 percent.
As interest rate cuts are expected even earlier in the USA, the US dollar is weakening. As a result, US dollar bonds are currently extremely sought after, as Brunner notes, both government and corporate bonds. Rainer Petz from Oddo BHF reports continued interest in government bonds in general, such as Romanian bonds. However, Italian bonds are also popular at the moment, as Tim Oechsner from Steubing AG notes, such as the one maturing in 2033 with a coupon of 5.75 percent (IT0003256820).
Corporate bonds: first series scores
Bonds from companies with good names are also attracting investors. Oechsner reports good demand for bonds issued by Deutsche Telekom (XS1617898363), Eon (XS2673536541), RWE (XS2523390271) and Fresenius (XS2698713695). These are due between 2026 and 2030 and offer yields of between 2.5 and 4.2 percent. Also in demand: a US dollar bond from the US department store chain Macy's (US55616XAC11) maturing in 2028, which currently yields 6.4 percent.
Öchsner
Beate Mägerle from Walter Ludwig Wertpapierhandelsbank sees many purchases for Mercedes-Benz bonds (DE000A3LH6U5), high turnover in both directions for long-dated bonds from Württembergische Lebensversicherung (XS1064049767). On the other hand, bonds from Hella (XS1611167856) and CK Hutchison Finance (XS1497312295) maturing in the coming year were on the sell lists.
Mutares (NO0012530965) shares rose, as Brunner observed. "They are benefiting from speculation about Mutares' promotion to the SDAX." There was also strong demand for the new bond issued by Neue ZWL Zahnradwerk Leipzig in mid-November with a yield of 9.5 percent until 2028 (DE000A351XF8). Purchases were also made for the Hertha BSC bond (SE0011337054). "The sporting successes continue to be lacking," noted the trader.
Real estate sector: Signa insolvency a burden
There are no signs of recovery in the real estate sector: The fact that René Benko's Signa holding company has now filed for insolvency is also weighing on other players. "This is already a topic on the bond market," notes Petz. "The entire industry is under pressure," Brunner also believes. He cites Publity (DE000A254RV3) as an example. "The company has announced losses for 2023, and the restructuring of the convertible bond of the Group subsidiary Preos would result in extensive, non-cash value adjustments."
Petz
However, bad news also came on Tuesday from ForestFinance Capital, a company that offers sustainable forest investments. The management announced that the interest payment due today on the 5.1 percent bond (DE000A3E46B7) maturing in 2030 would be delayed. "However, we do not see any price reactions," explained Mägerle.
Mini issue from Leef Blattwerk
A new bond from Leef Blattwerk GmbH (DE000A352ER1) can still be subscribed to until December 14. The company is offering 9 percent for a term until 2028. The issue is small, with a targeted volume of up to 5 million euros. The company offers disposable tableware made from palm leaves, as well as cutlery, food packaging and non-food products.
By Anna-Maria Borse, 1 Dezember 2023 © Deutsche Börse AG
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
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