25/10/24 14:59:00

Bonds: ‘Inflation shock if Trump wins?’

The US election is approaching and is causing uncertainty. This was reflected in a sharp rise in yields, including in Germany. In corporate bond trading, BMW, VW and Mercedes are the winners.
 

25 October 2024. FRANKFURT (Börse Frankfurt). The bond markets were very weak this week, with German government bonds recording significant losses in some cases. ‘This came from the US, where there is uncertainty due to the upcoming election,’ notes bond trader Rainer Petz from Oddo BHF. ‘There are fears that inflation will rise again if Trump wins.’ Arthur Brunner from ICF Bank also refers to US Treasuries, whose rise in yields at the long end has made itself felt in this country.

Trump = high tariffs, high inflation?

‘For the capital markets, the increased likelihood of President Trump means that the scenario of a global trade conflict with high tariffs could trigger the next inflation shock,’ explains portfolio manager Hannah Thielcke from Weber Bank. Inflation expectations have therefore risen in both the USA and the eurozone, which has then been reflected in rising base yields on government bonds.

A countermovement set in yesterday. The yield on ten-year German government bonds, which had peaked at 2.32 per cent, was back at 2.27 per cent on Friday lunchtime - after 2.20 per cent a week ago. Ten-year US Treasuries are currently yielding 4.19 per cent after 4.11 per cent last Friday.

Bonds from Italy and Romania in demand

According to Brunner, new Italian government bonds maturing in 2031 with a coupon of 3.15 per cent (IT0005619546) met with strong demand this week. In addition, a thirty-year Italian bond with a coupon of 4.3 per cent was successfully topped up (IT0005611741). Brunner also reported purchases of Romanian bonds with a coupon of 4.625 per cent until 2049 (XS1968706876). ‘Overall, however, things were rather quiet this week,’ he notes.

Arthur Brunner

In demand: BMW, Porsche, VW and Würth

This also applies to trading in corporate bonds. ‘The usual suspects are in demand, with maturities of up to seven years, small minimum denominations and good names,’ reports Tim Oechsner from Steubing AG. Bonds from BMW maturing in 2027 (XS2887901325), Porsche Automobil Holding maturing in 2030 (XS2643320109) and VW maturing in 2031 (XS2694874533), which are currently yielding 2.68 per cent, 3.69 per cent and 3.69 per cent respectively, are popular. According to Oechsner, the new bond from Würth, a manufacturer of assembly and fastening materials, has also been well received (XS2911681083),

A US dollar bond from McDonald's (US58013MEZ32) maturing in 2035 is also in demand, as Gregor Daniel from Walter Ludwig Wertpapierhandelsbank reports. ‘Investors are not being fazed by the news about the E. coli outbreak in the USA,’ says the trader. Also in demand: the MTU Aero Engines bond issued in September with a term until 2031 and a current yield of 3.39 per cent (XS2887896574).

Oechsner

According to Daniel, the new 7 per cent bond from Viennese property developer UBM Development maturing in 2029 (AT0000A3FFK1) is also popular. ‘At 6.94 per cent, the yield is currently lower than that of the UBM bonds maturing in 2025 and 2026 (AT0000A2AX04, AT0000A2QS11).’

According to Brunner, the actually very popular bond from Katjes International (NO0012888769) came under some selling pressure. ‘This was probably due to the very high valuation.’ The price had risen to over 109 per cent, now it is still 107 per cent. Meanwhile, the two bonds issued by the investment company Mutares (NO0012530965, NO0013325407) have recovered. A good four weeks ago, they had lost significantly due to a negative research report by short seller Gotham City.

News from WeGrow and ZWL

A secured green bond from WeGrow offering 8 percent until 2029 (DE000A383RQ0) is still available for subscription at Steubing AG until 7 November. The company claims to be Europe's leading sustainable producer of kiri wood, a particularly light speciality wood. The inclusion in trading is planned for 11 November. The new issue of Neue ZWL Zahnradwerk Leipzig with a coupon of 9.75 per cent and a maturity date of 2029 (DE000A383RA4) is currently under subscription at ICF, as Brunner reports. The subscription period runs until 5 November.

Also new to Steubing AG's order book is a US dollar bond from the Colombian oil, gas and coal company Ecopetrol with a coupon of 7.75 per cent until 2032 (US279158AW93).

From Anna-Maria Borse, 25. Oktober 2024, © Deutsche Börse

 

Neues von WeGrow und ZWL

Noch bis zum 7. November in der Zeichnung bei der Steubing AG ist ein besicherter Green Bond von WeGrow, der 8 Prozent bis 2029 bietet (DE000A383RQ0). Das Unternehmen ist eigenen Angaben zufolge Europas führender nachhaltiger Produzent von Kiriholz, einem besonders leichten Spezialholz. Die Einbeziehung in den Handel ist für den 11. November geplant. In der Zeichnung bei der ICF ist die Neuemission der Neue ZWL Zahnradwerk Leipzig mit Kupon von 9,75 Prozent und Fälligkeit 2029 (DE000A383RA4), wie Brunner meldet. Die Zeichnungsfrist läuft noch bis zum 5. November. 

Neu im Skontro der Steubing AG ist zudem eine US-Dollar-Anleihe des kolumbianischen Öl-, Gas- und Kohleunternehmens Ecopetrol mit 7,75 Prozent bis 2032 (US279158AW93).

Von Anna-Maria Borse, 25. Oktober 2024, © Deutsche Börse

Über die Autorin

Anna-Maria Borse is a financial and business editor specialising in the financial market/stock exchange and economic topics.
Feedback and questions to redaktion@deutsche-boerse.com

 

 

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