Posted on 05/14/2017 7:47:09 PM PDT by Lorianne
In the land of NIRP refugees and “Reverse Yankees,” who will get crushed?
At the end of the week, something special happened, something totally absurd but part of the new normal: the average yield of euro-denominated junk bonds – the riskiest, non-investment-grade corporate bonds – dropped to the lowest level ever: 2.77%.
April 26 had marked another propitious date in the annals of the ECB’s negative yield absurdity: the average euro-denominated junk bond yield had dropped below 3% for the first time ever.
By comparison, what is considered the most liquid and safe debt, the 10-year US Treasury, carries a yield of 2.33%; the 30-year Treasury yield hovers at 3%.
This chart of the BofA Merrill Lynch Euro High Yield Index (data via FRED, St. Louis Fed), shows just how crazy this has gotten in the Eurozone:
(Excerpt) Read more at wolfstreet.com ...
Buy!Buy!Buy! Oh, I misspelled BYE.
Holy cow! Fools & their money are soon parted. At least the brave folks who bought this debt when they were “giving it away” cleaned up by selling that debt (at a MUCH higher price) to the fools buying it now.
The euro was a mistake. Thinking that Greece and Germany should operate under the same interest/exchange rate is one of the most destructive ideas in economics of the past 30 years. It’s a miracle that the project has lasted as long as it has.
The article suggests that this phenomenon is driven by fund managers “investing” other people’s money (OPM). The fund managers will get juicy fees. Pensioners and mutual fund investors will ultimately take it in the shorts.
The EU is a mistake, if one falls we all fall
Why does it show price drops two days into the future?
lol
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