Bonds: “Yields are falling; short-term bonds are in demand”

Following the peak about two weeks ago, bond yields are falling noticeably. Traders report buying activity in short-term bonds with high credit ratings. Activity remains brisk in the primary market: SAP has placed four euro-denominated bonds, raising 3.5 billion euros in the process.

May 29, 2026. FRANKFURT (Deutsche Börse). The rise in bond yields that began three months ago appears to have come to an end. Since peaking on May 19, yields on 10-year government bonds in Europe and the U.S. have fallen significantly. The yield on 10-year U.S. Treasuries fell from 4.57 percent to 4.44 percent over the week, after reaching a high of nearly 4.70 percent. The yield on 10-year German government bonds fell from a peak of 3.20 percent to 3.06 percent the previous week and now stands at 2.95 percent.

“The majority of financial market participants clearly assume that the signs of easing in the Iran conflict will actually lead to a breakthrough this time,” explains Elmar Völker of LBBW. In the analyst’s view, “the temporarily higher long-term yields also seem to have lured some investors out of their shell, who viewed the price decline as an attractive entry signal.” Conversely, rising yields on bonds mean falling prices.

Yields Could Continue to Fall

Ilona Korsch of Hauck Aufhäuser Lampe currently describes the situation on the bond markets as a “back-and-forth.” However, in the event of a “sustained downward trend,” the yield on the 2-year German government bond (which fell from 2.63% to 2.56% over the week) could next approach the 2.50% mark. For the 10-year German government bond, she sees the next target as the 2.90% range. 
Ralf Umlauf of Helaba attributes the decline in yields primarily to lower energy prices. The Bund future, as a price barometer for German bonds, has climbed in this environment from a low of 123.80 points to its current level of 126.20 points. According to Umlauf, it is thus approaching its “recently reached momentum high of 126.48 points.” The analyst cites the 55- and 21-day moving averages, currently at 125.44 and 125.26 respectively, as technical support levels.

Purchases of Short-Term High-Quality Bonds

In bond trading on the Frankfurt Stock Exchange, the focus is currently on short-term, high-quality bonds, while long-term bonds are being avoided due to interest rate risk. This is reported by Tim Oechsner of Steubing AG. As an example, the trader cites a Mercedes-Benz Group bond (DE000A2GSCW3) maturing in just over three years with a yield of around 3.0 percent.

Buying short-term high-quality debt

In bond trading on the Frankfurt Stock Exchange, the focus is currently primarily on short-term, high-quality bonds, while long maturities are being avoided due to interest rate risk. This is reported by Tim Oechsner of Steubing AG. As an example, the trader cites a Mercedes-Benz Group bond (DE000A2GSCW3) maturing in just over three years with a yield of around 3.0 percent.