Deutsche Bank CEO Christian Sewing Warns Elevated Bond Yields to Persist Amid Political Uncertainty.

Deutsche Bank CEO Christian Sewing expects bond yields to remain elevated due to political uncertainty, lack of reforms, and rising indebtedness. He believes the recent selloff is not just a "flare-up" and expects yields to remain high despite not anticipating further market dislocations. Sewing attributes the changed risk sensitivity to discussions about central bank independence.

Deutsche Bank AG Chief Executive Christian Sewing has expressed his expectation that bond yields will remain elevated in the coming months, attributing this trend to political uncertainty, a lack of reforms, and rising global indebtedness. Sewing made these remarks at a conference organized by Handelsblatt, where he emphasized that the recent bond selloff is not merely a temporary "flare-up" but rather a reflection of deeper structural issues [1].

According to Sewing, the elevated yields are not expected to worsen significantly or trigger broader market disruptions. However, he acknowledged that the current risk sensitivity has increased due to ongoing discussions about central bank independence. These discussions, he noted, do not provide much reassurance to the capital markets [1].

Global bond markets have been facing significant selling pressure due to inflation concerns, debt sales, and fiscal discipline issues. In the UK, 30-year yields reached their highest levels since 1998, while US debt yields are approaching the closely watched 5% level. France's political crisis, with Prime Minister Francois Bayrou calling a confidence vote over budget cuts, has added to the global uncertainty [1].

In Japan, budget demands have hit a record high of 831 billion yen ($831.13 billion), driven by record debt-servicing costs and defense spending. The uncertainty surrounding the political future of Prime Minister Shigeru Ishiba has further contributed to market concerns. The bond market views Ishiba's potential replacement, former economic security minister Sanae Takaichi, with caution due to her reflationary stance [2].

Isabel Schnabel, a member of the European Central Bank's Executive Board, has underscored the importance of central bank independence, warning that any attempts to undermine it could lead to higher interest rates and inflation. Schnabel believes that politically motivated interest rate cuts could erode investor confidence, leading to higher long-term borrowing costs [3].

In the meantime, Deutsche Bank has upgraded its recommendation for Sanofi shares from "hold" to "buy," citing optimism over the potential of a new treatment for atopic dermatitis called amlitelimab. The analysts believe that amlitelimab could replace Dupixent, Sanofi's flagship drug, which accounts for nearly half of its pharmaceutical revenues. The upgrade reflects growing investor optimism about Sanofi's ability to diversify its revenue streams [4].

References:
[1] https://www.bloomberg.com/news/articles/2025-09-03/deutsche-bank-s-sewing-says-bond-selloff-isn-t-just-flare-up
[2] https://www.reuters.com/markets/asia/japans-budget-demands-hit-record-831-billion-political-uncertainty-increases-2025-09-03/
[3] https://www.markets.com/vc/news/central-bank-independence-global-financial-stability-892-en-eu/
[4] https://www.ainvest.com/news/sanofi-deutsche-bank-upgrades-buy-recommendation-hold-hold-2509/