Deutsche Bank CEO: bond selloff reflects lack of reforms

Deutsche Bank CEO: bond selloff reflects lack of reforms

In a recent interview, the CEO of Deutsche Bank, Christian Sewing, has attributed the ongoing selloff in long-dated bonds to a lack of significant reforms in the global economy. Sewing's comments come at a time when longer-maturity bonds, particularly those with maturities over 10 years, are facing a challenging month, with historical data indicating a median loss of 2% in September [2].

The selloff in long-dated bonds has been exacerbated by several factors, including concerns about high government spending, sticky inflation in Japan, political turmoil in France, and speculation about potential interest rate cuts by the Federal Reserve [2]. Sewing noted that the vulnerability of long-dated government debt reflects years of heavy issuance to fund public spending, which has exacerbated budget deficits.

The CEO also highlighted the near-term risks posed by upcoming economic data releases, such as US payrolls data and Euro-zone inflation data, which could influence market sentiment and bond yields [2]. Additionally, the busy corporate bond pipeline and the upcoming Japanese 30-year bond sale are expected to add to the overall supply, further pressuring long-dated bonds [2].

Sewing emphasized that the lack of meaningful reforms in the global economy is a significant factor contributing to the bond selloff. He noted that while the global economy has shown signs of recovery, the absence of structural reforms to address long-term fiscal sustainability and economic growth has created an environment of uncertainty and volatility.

The CEO's comments underscore the need for policymakers to address the underlying issues that are contributing to the selloff in long-dated bonds. As the bond market continues to face challenges, investors should closely monitor the progress of economic reforms and the potential impact on bond yields and market sentiment.

References:
[1] https://www.ainvest.com/news/frontier-group-benefit-spirit-airlines-restructuring-deutsche-bank-predicts-2509/
[2] https://finance.yahoo.com/news/world-long-dated-bonds-face-224002501.html