German bonds: Strong price gains – Credit Suisse turbulence unsettles

FRANKFURT (dpa-AFX) – The turbulence surrounding the major Swiss bank Credit Suisse gave the prices of German government bonds a significant boost on Wednesday. Safe investments such as government bonds were in demand while the stock markets plummeted.

The trend-setting futures contract Euro-Bund-Future rose very significantly by 2.80 percent to 137.73 points. In contrast, the yield on ten-year Bunds fell by 0.29 percentage points to 2.11 percent. The yields on bonds from other euro countries and also from Switzerland came under severe pressure.

After a recovery on the previous day, the mood on the stock markets clouded over again in the middle of the week. Market participants referred to bad news from the major Swiss bank Credit Suisse (Credit Suisse (CS)), which has been in the headlines for some time. The head of the Saudi National Bank, Ammar Abdul Wahed Al Khudairy, categorically ruled out additional support in an interview with Bloomberg TV. The bank is a major shareholder in Credit Suisse. According to a report by the Financial Times, the ailing bank has asked the Swiss National Bank (SNB) and the financial market regulator Finma to signal support.

The news hit an already tense market mood. Up until Tuesday, turbulence in the US banking sector had caused great uncertainty on the stock exchanges. The background are problems of several regionally active institutes, which are primarily active in the technology sector. The most prominent case is the Silicon Valley Bank (SVB), whose customer deposits were guaranteed by the US government over the weekend.

It remains questionable how the major central banks will react to the tense situation. According to previous plans, the European Central Bank (ECB) intends to continue its fight against inflation with another significant interest rate hike on Thursday. The US Federal Reserve follows about a week later, which actually also sent signals for further tightening./jsl/jha/