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Polish bonds are gaining in value. An analyst forecasts a 6% return
Government bonds gained, but the market still gives no clear answer on how long the improvement will last
The upward correction in government bonds was helped by Wednesday’s auction of Polish securities and better sentiment in the global bond market. However, Emil Szweda, chief analyst at Michael / Ström Dom Maklerski, said the durability of this improvement remains uncertain.
According to him, investors who bet on a rebound in bond prices have had a good few days. He added, however, that the target remains the upper end of the consolidation range in which the securities have been stuck over the past three and a half years. For 10-year government bonds, that would be around 6,0 percent, compared with 6,5 percent at the end of September.
The auction itself also supported the market. Demand reached 20,2 mld zł, or 8,2 mld zł more than the amount on offer. The analyst pointed out that such strong demand at a single auction was last seen in February, before the outbreak of the conflict involving the U.S., Israel and Iran and its consequences.
Sentiment in the global debt market also mattered, especially on Thursday. After the release of U.S. inflation data, which came in at 3,7 percent versus 3,6 percent expected, investors sold off U.S. securities. On Thursday afternoon, the yield on 10-year Treasuries fell to 5,04 percent, or 29 basis points from Wednesday’s worst point.
Szweda said this setup may signal a turning point. In his view, the market has already partly priced in higher inflation, while at the same time expecting interest rate hikes that could curb price growth over the longer term. Bonds were also helped by the selloff in equities, especially in the AI sector, as some investors looked for a safer place to put their capital.
On the domestic corporate market, an important event was the release of Ghelamco’s half-year report along with a statement and action plan aimed at repaying all issued bonds. After trading was resumed, the developer’s securities gained value, in some cases by as much as several percentage points, although prices still remained below par. Archicom, Polska Grupa Farmaceutyczna, Cavatina Holding and Best also announced new bond issues, showing continued investor interest in corporate debt.
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