The Weekly Brief (23 November 2015) - J.P. Morgan Asset Management

The Weekly Brief (23 November 2015)

Contributor Global Markets Insights Strategy Team

The potential for additional Quantitative Easing from the European Central Bank saw eurozone government bond yields reach new lows last week.

This week’s chart shows that the percentage of outstanding eurozone government bonds trading at a negative yield is approaching record highs last seen in April 2015. Last week we also saw Portugal able to auction off short-term debt at a negative yield for the first time and the German government was able to auction off 2-year debt at a yield of -0.4%, a record low. In addition to this, over 67% of eurozone government bonds yield less than 1%. As the income challenge intensifies, investors could consider moving along the risk spectrum to European high yield debt, given the Barclays Pan-European High Yield index currently offers a more attractive yield of close to 5%.

Euro area government bonds with a negative yield
BofA/ML euro area bond index

Source: Bloomberg, Bank of America Merrill Lynch, J.P. Morgan Asset Management; data as of 20 November 2015.

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The Weekly Brief (23 November 2015)