Corporate bonds in Europe have taken their biggest hit since 2020 over the past week after a sudden pivot from the European Central Bank toward tighter policy reanimated worries about the region’s economic health.
“The ECB’s unexpectedly hawkish stance has been a detonator for a selloff,” said Vincent Benguigui, a credit portfolio manager at Federated Hermes.
Euro-denominated investment-grade bonds have fallen 1.9% over the past week on a total return basis, the most since June 2020, according to an
BofA index. High-yield bonds declined 2% in their weakest week since the pandemic began.
In a sign that the easy money of the pandemic era is ending, or at least taking a pause, the selloff pushed the yield of a euro-denominated junk-rated bond index above the average coupon rate for the first time since November 2020. This…
