Bonds: Strong interest in long-term bonds

Hopes for further interest rate cuts in the US have been dampened slightly. Rising yields are dominating the market. Bonds with relatively long maturities are an exception. Here, investors are on the buying side.

26 September 2025. FRANKFURT (Börse Frankfurt). In recent days, yields on the bond markets in Europe and the US have continued to rise. This was mainly due to economic data from the US. Initial jobless claims in the US fell significantly for the second week in a row, and orders for durable goods were surprisingly high. “The robust US data has dampened expectations of interest rate cuts somewhat,” explains Ralf Umlauf of Helaba. The yield on 10-year US government bonds rose from 4.12 percent to 4.17 percent over the week. This continued the moderate upward trend since the Fed's interest rate cut last week.

Further easing not set in stone

The majority of markets are still pricing in two further steps of 25 basis points each by the end of the year. “However, there are no clear indications of this from the US Federal Reserve,” writes Umlauf. Although the door is open for further easing, the Fed is acting on a meeting-by-meeting basis depending on the data. Martin Hartmann of Commerzbank takes a slightly different view. In his opinion, the number and extent of further interest rate cuts “depend more on the degree of interference by the US government in the Fed's personnel policy than on macroeconomic developments.” However, the expectation of slightly higher inflation rates and relatively positive figures from the US labor market “tend to point to rising yields on government bonds.”

The ECB is likely to wait and see for a while

With the yield on 10-year German government bonds climbing from 2.73 percent to 2.76 percent over the week, Hartmann does not expect a sustained rise above the 2.80 percent mark. The upcoming inflation data from Germany and the eurozone are unlikely to cause the ECB “much concern.” Commerzbank strategists do not expect the ECB to ease monetary policy for the time being, which is in line with current market expectations. Elmar Völker of LBBW also expects, in view of the latest monetary policy and macroeconomic signals, “that the ECB will leave its deposit rate unchanged at 2.00 percent for at least the next twelve months.”

The Bund Future in the chart check

Strong US data put the Bund Future under some pressure this week. The 128.00 point range was “only able to provide support with difficulty” for the German government bond price barometer, as Umlauf notes. The analyst describes the contract low of 127.61 points as the “next support level.” On the upside, the range is limited by the 21- and 55-day lines, which currently run at 128.54/58 points.

Discrepancy between supply and demand

What is currently striking is the global decline in supply at the long end of the yield curve, as some countries such as Australia, the UK, and Japan are increasingly focusing on the currently more favorable short-term bonds for their new issues. “There won't be much supply at the long end of the market,” explains Matthew Amis, fund manager at Aberdeen. If demand is sufficient, this could lead to rising prices in this area. In line with this, Gregor Daniel reports sustained demand for an E.On bond maturing in 2044, which currently yields 4.2 percent (XS2791960664). The trader at Walter Ludwig Wertpapierhandelsbank cites another example: a bond issued by the Republic of Bulgaria, also maturing in 2044, with a yield of 4.3 percent (XS2890435600).

Mercedes-Benz and Deutsche Pfandbriefbank in focus

In the corporate bond segment, Daniel also reports purchases of the Mercedes-Benz bond maturing in 2031 (DE000A3LH6U5) with a yield of 3.1 percent. A bond issued by Deutsche Pfandbriefbank at the end of August with a three-year maturity and a yield of 3.3 percent (DE000A382665) also continues to be in demand.