Bonds: "Recovery after stock market tremors"

The flight to safety is over, the markets are normalizing. After the sharp fall in Bund yields, things are now moving upwards again. The selling pressure on high-yield bonds has also come to an end.
 

9 August 2024. FRANKFURT (Börse Frankfurt). Recession worries have caused prices on the bond market to rise sharply this week and yields and stock markets to fall. The trigger: last Friday's US labor market report, which was significantly worse than expected. Calm has since returned, the stock markets are recovering and yields are rising again.

"At the beginning of the week, we saw a flight to safety, then it was the other way around," says Tim Oechsner from Steubing AG, describing the situation. "Nervousness was very high at the beginning of the week," reports Arthur Brunner from ICF Bank. With the "quake on the stock market", safe havens were sought, i.e. German and US government bonds. High-yield bonds came under pressure. "It was not clear whether the crisis would spread." 

Yields: Back to the previous week's level

So far it doesn't look like it: On Friday morning, the yield on ten-year German government bonds is already back where it was just over a week ago, at 2.25 percent - after 2.09 percent at the low on Monday. Ten-year yields in the USA have also risen again after a significant fall, but remain below the 4 percent mark at 3.96 percent.

In government bond trading, Austrian long-term bonds are in demand, as Gregor Daniel from Walter Ludwig Wertpapierhandelsbank reports, maturing in 2037, with a coupon of 4.15 percent and a current yield of 2.89 percent (AT0000A04967). At Steubing AG, the bonds of the European Stability Mechanism ESM (EU000A1U9894) maturing in September 2025 continue to perform well. They are currently yielding 2.66 percent. 

BASF, Mercedes, Porsche - well-known names in demand

After the turbulence surrounding last weekend, trading was quiet in the following days. "It's definitely something of a summer break, and there are hardly any new issues," Oechsner notes. Bonds from BASF maturing in 2027 and currently yielding 2.42% (XS1718418103), Mercedes-Benz maturing in 2026 and yielding 2.61% (DE000A2AAL31), Knorr-Bremse maturing in June 2025 and yielding 3, 03 percent (XS1837288494), Porsche Automobil Holding until 2028 and 3.22 percent (XS2615940215), Deutsche Bahn until 2027 and 2.47 percent (XS1752475720) and BMW until April 2025 and 2.52 percent (XS1589881785). Daniel sees good demand for RWE bonds maturing in 2029 with a current yield of 2.90 percent (XS2584685031). endite von 2,90 Prozent (XS2584685031). 

High-yield bonds on the road to recovery

Brunner notes that high-yield bonds, such as those issued by the investment company Mutares, briefly recorded significant price losses. This matures in 2027 and offers a coupon of 12.222 percent (NO0012530965). "The price fell to 104.8 percent, but is now already back at 106.25 percent." 

Katjesgreenfood increases popular bond issue

Brunner reports high turnover for Katjesgreenfood bonds (DE000A30V3F1). "The bond is being topped up at a price of 102 percent." Following the takeover of the organic muesli provider mymuesli by Katjesgreenfood, there had already been speculation about a new bond. The bond, which matures in 2027 and has a coupon of 8 percent, is currently trading at 103 percent. Katjesgreenfood offers plant-based foods in particular and is part of the Katjes Group alongside Katjes Fassin ("Katjes Deutschland") and Katjes International.

Oechsner also sees some turnover in Ferralum Metals Group securities with a coupon of 10 percent and a term until 2026 (DE000A3LWZV6). Ferralum bundles the aluminum, bulk materials and ferrous metals business formerly belonging to Metalcorp, which was spun off from the Metalcorp Group by way of a management buyout.

From Anna-Maria Borse, 9 August 2024, © Deutsche Börse