The yield on ten-year Bunds has risen to 0.017 percent, the first time it has been positive for almost three years. For savers, however, almost nothing will change for the time being.
Investors get money again for their loans to the German state. On Wednesday, the yield on the landmark ten-year Bund rose to 0.017 percent. For the first time since the beginning of May 2019, it reached a value of more than zero percent. Fearing that the major central banks would raise interest rates in quick succession, investors threw government bonds out of their portfolios.
This development has already become apparent, said Elmar Völker, an analyst at LBBW, in an initial reaction. There is “downward pressure on bond prices” and correspondingly “upward pressure on yields”. And that comes mainly from the United States, “where there are increasing signs that the US Federal Reserve is likely to herald a turnaround in interest rates in just a few weeks,” said Völker. There has recently been speculation that it could raise interest rates as early as March, earlier than originally expected on the financial markets. The European Central Bank, on the other hand, does not want to raise interest rates at the moment.
A “turning point” at the central banks
“Of course, the zero mark is purely symbolic and has no economic added value,” said Carsten Brzeski, chief economist at ING Bank. However, the increase in yields generally shows the “turning point” at the central banks. “Loans are slowly becoming a little more expensive again or – to put it better – a little less cheap. Borrowers and home builders can expect slightly rising interest rates this year.” Nothing will change for savers, said Brzeski, because he does not expect the key interest rate to rise until early 2023.
Due to the higher yields, unattractive share purchases and long-term oriented investors should now be increasingly attracted by bonds; they have now had to accept negative returns for almost three years, said LBBW analyst Völker. However, it will “take a long time before the yields on five-year or even two-year bonds become positive again”. Federal Finance Minister Christian Lindner (FDP) must now expect that loans will become more expensive – even if only very slightly. “We don’t need to worry about Christian Lindner’s finances, even with these returns,” said Brzeski.