The sale on the bond market continues to take off, as investors are screwing back their expectations of an early interest in reducing the US Federal Reserve Fed. Rising returns and uncertain forecasts ensure increasing pressure on the markets.
• Global bond market under pressure
• Investors expect less interest reductions through the Fed
• concerns about state finances
The sale of the global bond markets accelerates, the bond returns have also increased. For example, the return of the 10-year US state bonds reached the highest level in several months. Bonds are under pressure because rising returns are associated with falling courses. Shortly before the US presidential election in mid-September last year, the return of the 10-year US state bonds was around 3.6 percent, now it is around 4.61 percent (as of January 24, 2025). And according to experts, the increase could even continue for the time being. Mohamed el-Erian, consultant, among other things, the Allianz, for example, believes that the return can “spend part of the year in the range of 4.75 to 5.0 percent,” quotes the Handelsblatt. Samy CHAAR, chief campaign strategist of the Swiss private bank Lombard Odier, is similar and even warned: “I would feel uncomfortable if the returns rise over five percent”, because at the latest from this threshold the sale to the bond markets could also skip the stock market .
Worries about state finances grow
One reason for these developments is seen in the increasing concerns about the state finances. Because this also increases the risk of higher credit costs for consumers and companies worldwide. According to CNBC, the US government reported a deficit of $ 129 billion and more than 50 percent more than a year earlier at CNBC. Steve Sosnick, chief strategist at Interactive Brokers, according to the effects of higher returns on governments and companies are only one thing: “They are not good!” Quotes CNBC. “Dailiffs send a wake -up call to the world’s financial authorities to get their budget developments under control so that they don’t get more trouble,” emphasized Tony Crescenzi, Executive Vice President at PIMCO, CNBC. In addition, investors now required adequate compensation for the risk of having bonds with a long term because they are concerned about the government’s large budget deficits, explains CNBC.
Interest expectations are shifting
In addition, statements by the US Federal Reserve Fed have caused uncertainty, because this recently promised fewer interest reductions despite falling inflation rates. In addition, she emphasized that interest rates could stay at a high level longer in order to keep inflation under control.
A few months ago, market participants had expected some interest reductions in 2025, but most recently the US Federal Reserve forecast only forecast two low interest rates. A better than expected unusual US labor market report contributed to rethinking. The US economy recovered faster than expected, which said the Federal Reserve less or no scope for interest rate cuts, such as Ben Emons, founder of Fedwatch Advisors, said CNBC. The bond market reflects these developments. Because instead of a quick change of course by the Fed, the markets are increasingly adapting to a scenario in which the Monetary policy It remains restrictive for a long time, which ensures uncertainty. The probability of a single Interest rate According to the employment report, the Fedwatch indicator of the CME Group increased in 2025. “According to the employment report, we only calculate between one and two interest reductions,” CNBC also quotes Steve Sosnick, chief strategist at Interactive Brokers.
Investors unsettled
Investors had entered a small “buyer strike”, Dan Tobon, head of the G10 trial strategy at Citi, noted. Investors who had speculated on early interest rate cuts are forced to rethink their positions and sometimes carry out large -volume sales. You would also like to wait and see for the first few weeks after Trump’s inauguration, says the expert CNBC. “Because why should you give an advance of trust if you will have a lot more information in a few weeks? And this buyer strike means that the returns simply continue to rise quite aggressively,” said Tobon. And he also expects: “If they are perceived as inflationary or negative for the budget deficit, the crash will probably stop”.
The sale of bonds and the changed expectations of the interest policy of the Fed illustrate the challenges that the Financial markets currently stand. Now it remains to be seen how the markets will continue to develop – especially after the re -elected US President Donald Trump took office.
Editor finance.net