Bonds: „Cuts of 50 basis points probably not the Fed's new pace’“

Normalisation of the yield curve

Ten-year German government bonds are yielding 2.18 per cent on Friday morning after 2.15 per cent a week ago. US Treasuries with the same maturity are currently yielding 3.70 per cent after 3.65 per cent last Friday. ‘At the long end, the US interest rate cut has hardly made itself felt, but at the short end,’ says Arthur Brunner of ICF Bank. Deutsche Bank speaks of a normalisation of the yield curve: ‘Yields on two-year US government bonds are now as far below those on ten-year bonds as they were last in spring 2022.’ Interest rates for the shorter term had long been above those for the longer term, which is atypical.

Car manufacturers stabilise, Südzucker plummets

In corporate bond trading, the pressure on the automotive industry has eased. ‘The situation has calmed down, both for car manufacturers and suppliers,’ reports Marcus Mielert, who trades bonds for Oddo BHF. ‘Very little is happening in the auto bond market,’ notes Gregor Daniel from Walter Ludwig Wertpapierhandelsbank. He reports smaller sales for the Sixt bond issued in January, which matures in 2029 and offers a coupon of 3.75 per cent (DE000A3827R4). In the previous weeks, the VW crisis and the BMW recall had led to losses. 

Shares in Südzucker (XS0222524372) fell sharply after a profit warning, as Brunner reports. ‘Turnover was very high.’ The price fell 102 per cent to a low of 90 per cent and is currently back at 94.6 per cent. Bonds from confectionery manufacturer Katjes International (NO0012888769) and - after a brief setback - shares in project developer for wind and solar parks ABO Energy (DE000A3829F5) were also in high demand.

Popular: News from MTU and Mutares

According to Daniel, the new bond from MTU Aero Engines with 3.875 per cent until 2031 (XS2887896574) is ‘constantly being bought’. According to Daniel, a new bond from RCI Banque (Renault Credit International) with a coupon of 3.875 per cent and a term to 2030 (FR001400SSO4) has been trading since this week. ‘Unfortunately, it has not yet attracted the attention of investors.’ Brunner sees good turnover in the new Mutares bond with a coupon of 9.73 per cent until 2029 (NO0013325407). ‘After a brief setback, it is now trading at 100 per cent again.’

Turkey's declining inflation is attractive

Also popular: securities in Turkish lira, such as a zero-coupon bond from the European Bank for Reconstruction and Development maturing in 2030 (<XS2712548655>) or, from the same issuer, with a coupon of 28 per cent and maturity in 2027 (XS2537091899), as Daniel observes. The yield is currently 47.8 per cent and 34.5 per cent respectively. Inflation in Turkey is still extremely high, but has recently fallen. In August, it stood at 52 per cent, after 72 per cent in June and 62 per cent in July.

B< Anna-Maria Borse, 20 September 2024, © Deutsche Börse