Bonds: "Speculation about the further interest rate path"
Hardly anyone doubts that interest rates will be cut in Europe and the USA in September. So the question now is what will happen afterwards. New bonds are coming from BMW and Eli Lilly, among others.
23 August 2024 FRANKFURT (Frankfurt Stock Exchange). In view of the interest rate cuts in the USA and the eurozone that are likely to take place in September, yields remain at a comparatively low level. There were no major movements this week. Bond trader Tim Oechsner from Steubing AG speaks of a week with little momentum. “The data calendar is rather empty, the trading floors are sparsely populated in August.”
There is also a wait-and-see attitude ahead of the speech by US Federal Reserve Chairman Jerome Powell at the conference in Jackson Hole at 4 pm today. The hope is for signals regarding the Fed's further course of action. The minutes of the last meeting published on Wednesday showed that several US central bankers had already seen “plausible arguments” for a rate cut at the end of July. “The minutes clearly point to an initial interest rate cut of 25 basis points in September, which is considered a 'done deal'”, comments Oechsner.
Oechsner
Expectations of an interest rate cut also underpinned for the eurozone
In the eurozone, the latest purchasing managers' indices were among the few highlights this week. “The economic situation in Germany has not improved and the purchasing managers' indices have fallen again,” reports analyst Ralf Umlauf from Helaba. “This is likely to have underpinned expectations of an interest rate cut.”
The yield on ten-year Bunds continues to fluctuate around 2.22 percent, at 2.25 percent on Friday lunchtime.
Good turnover at Katjesgreenfood
Trading in corporate bonds is also quiet, as traders explain. “There was not much going on in terms of news,” notes Rainer Petz from Oddo BHF. “There is still no reason to become active,” comments Gregor Daniel from Walter Ludwig Wertpapierhandelsbank. There is some movement in both directions for bonds issued by wind farm developer PNE with a coupon of 5 percent until 2027 (DE000A30VJW3).
Daniel
Arthur Brunner from ICF Bank reports turnover for bonds from Katjesgreenfood with 8 percent until 2027 (DE000A30V3F1) as well as the increase at identical conditions (DE000A383FM4). “The ISINs will soon be merged,” explains the trader. Katjesgreenfood offers plant-based foods in particular and is part of the Katjes Group.
According to Brunner, the 8.875% bond issued by The Platform Group in July with a maturity date of 2028 (<NO0013256834Y>) was sold throughout the week. “Today, however, the company reported good figures for the first half of the year, with growth in turnover and earnings.” According to the trader, figures also came from Finnish financial services provider Multitude (NO0013259747). “They were better than expected.”
Brunner
Brisk issuing activity expected
BWM has launched new bonds in three tranches. One runs until 2027 and offers 3 percent (XS2887901325), the other 3.125 percent until 2030 (XS2887901598), as Oechser from Steubing reports, and the third - ICF is the specialist here - 3.375 percent until 2034 (XS2887901911). The minimum investment amount is 1,000 euros. “We are already seeing a lot of turnover,” explains ICF trader Brunner.
According to Oechsner, new US dollar bonds came from the US pharmaceutical company Eli Lilly with 4.15 percent until 2027 (US532457CP17) and as a long-term bond with 5.05 percent until 2054 (US532457CS55) as well as from the US supermarket chain Kroger with 4.7 percent until 2026 (US501044DR92). The minimum investment here is 2,000 US dollars.
According to bond analyst Hauke Siemßen from Commerzbank, issuing activity will increase with the end of the summer break - both on the government bond and corporate bond markets. With interest rates low, many issuers are facing comparatively low financing costs. “That speaks for brisk issuing activity.”
By Anna-Maria Borse, August 23, 2024, © Deutsche Börse
Deutsche Börse 
