Bonds: “The Market Is Sending Warning Signs”
Government bond yields have reached levels this week not seen in 15 or nearly 20 years—and this is happening worldwide. There are several reasons for this. Uncertainty has also made itself felt in the corporate bond market.
August 21, 2026. FRANKFURT (Deutsche Börse). After a period of high nervousness in the bond market marked by extremely high yields, things have recently calmed down somewhat. The unexpected announcement by the U.S. Treasury Department that it would increase repurchases of long-term bonds contributed to this.
The yield on 10-year German government bonds climbed at times this week to 3.27 percent—the highest level since 2011. At the beginning of the year, it was still at 2.81 percent. The yield on 30-year bonds was also at a level last seen in 2011.
In other European countries such as France and the United Kingdom, as well as in the U.S. and Asia, yields also rose significantly. The yield on 30-year U.S. Treasuries even reached its highest level since 2007. “Something is brewing,” commented Gregor Daniel of Walter Ludwig Wertpapierhandelsbank. “Investors want to see higher interest rates,” noted Arthur Brunner of ICF Bank. In this context, U.S. Treasury Secretary Scott Bessent’s announcement that the government will step up its bond purchases is a relief for the markets, Daniel adds.
Capital-hungry countries and tech companies
On the one hand, the sharp rise in oil prices has intensified inflation concerns and, with them, expectations of rising key interest rates. On the other hand, high government debt in nearly all major industrialized nations is increasingly viewed with skepticism. The fact that major tech companies are raising enormous sums on the capital markets is also causing growing uncertainty.
“The key question is: Do the expected returns from AI infrastructure justify the high investments? This is precisely where investor skepticism is growing,” notes Tim Oechsner of Steubing AG. Brunner points to Alphabet’s latest bond issue—denominated in Australian dollars. “Alphabet has to pay nearly 7 percent for the 20-year bond. This shows the enormous burdens companies are facing.”
Tim Oechsner
U.S.: Debt Keeps Rising.
According to the Handelsblatt, total U.S. debt will soon reach 40 trillion U.S. dollars. The debt-to-GDP ratio stands at 123 percent, up from 65 percent in 2007. “The U.S. government will pay 1 trillion U.S. dollars in interest on this national debt this year alone—more than it spends on defense,” the report states.
There was some activity at Steubing AG this week in Spanish government bonds (ES0000012L60). Oechsner also reported strong trading volume in Italian (IT0005240350) and U.S. government bonds (US912810TV08).
First-tier bonds in demand; second- and third-tier bonds volatile
In the corporate bond market, the RWE bond issued in early July with a 4 percent coupon and maturing in 2037 (XS3430748676) remains in demand, as Daniel reports. Also popular: bonds from Deutsche Post (XS3084418907), Mercedes-Benz and Heidelberg Materials (XS3379436598), maturing between 2031 and 2035. At Steubing AG, there is heavy trading in bonds issued by the Renault-affiliated bank RCI (FR001400CRG6), the energy provider EnBW (XS2579293536), Nestlé (XS2555198162), and long-term U.S. dollar bonds from Ford (US345370CS72).
Homann Struggling
However, the uncertainty has also taken its toll here. “Investors are seeking safety,” notes Brunner. The Hertha bond (SE0011337054), for example, has been trading significantly weaker in the meantime, as the trader reports.
News of the insolvency of the construction group Pandion has also put further pressure on the bond (DE000A289YC5), which was already trading at just 4 percent.
As Daniel further explains, Homann Holzwerkstoffe (NO0013536169) experienced “ups and downs” following last week’s sharp drop in its stock price. After reporting weaker-than-expected half-year results, the company had lowered its full-year forecast, partly due to subdued demand from the furniture industry and start-up losses at its Pagiriai plant in Lithuania. The stock price, which had previously been above 100 percent, fell significantly to around 80 percent.
By Anna-Maria Borse, August 21, 2026, © Deutsche Börse AG
About the Author
Anna-Maria Borse is a finance and business editor specializing in financial markets, the stock market, and economic issues.
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