Introduction
Federal bonds and the DAX are currently in a unique competition for investor capital. The yields on long-term federal bonds are currently at about 2.5 percent – a level they had already reached before the first ECB rate cut in June 2024. The fact that yields are not falling further despite rate cuts indicates structural changes in the market.
Reasons for the Development
- National Debt: Concerns over rising national debt have increased, as countries issue more bonds to refinance themselves.
- Contagion Effect: The rising U.S. bond yields are also affecting other markets, keeping the yields of federal bonds stubbornly high.
- Attractiveness Despite Weak Development: Long-term federal bonds offer a stable yield with lower volatility than stocks, making them attractive to some investors.
Comparison: Federal Bonds vs. DAX
Feature | Federal Bonds (Long-term) | DAX |
---|---|---|
Yield | approx. 2.5% | Dividend yield usually lower |
Risk | Low to moderate | Higher (Market fluctuations) |
Price Development | Weak | Strong (currently booming) |
Attractiveness | Stable cash flow | Potential for high profits |
Conclusion
Federal bonds are indeed competing with the DAX – at least for risk-averse or diversifying investors. Despite weak price development, they are attractive due to their stability – especially compared to an overheated equity market like the current DAX boom.