2017 Integrated Report – Departure into a new era

Slight rise in the interest level

German bunds
(ten-year)
(%)

2017

2016

Change
(percentage
points)

Average yield

0.38

0.13

+0.25

Highest yield

0.64

0.58

+0.06

Lowest yield

0.15

–0.20

+0.35

Year-end yield

0.24

0.20

+0.04

Source: Thomson Reuters

Yields on ten-year German Federal bonds (bunds) were on an upward trend in 2017. While the US Federal Reserve (Fed) raised its key interest rate to 1.25 – 1.50% in three interest rate hikes in 2017, the European Central Bank (ECB) maintained its extremely loose monetary policy. With inflation in the Eurozone picking up slightly, the ECB announced a reduction in the volume of its bond purchase program in 2018 and an extension of its term to at least the end of September 2018. Yields consequently rose as high as 0.64%. It was not only the central banks that had a significant im­pact on bonds: so did the equity market. The positive development on the stock exchanges was also reflected in investors’ continuing willingness to accept risk.