Europe’s Sinking Bond Yields Pass Ominous Milestone for Traders
- Average bid-ask spread exceeds yield in investment-grade bonds
- Alternative credit-trading instruments gain traction in Europe
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Plummeting European bond yields have sunk so low they’ve created a distortion with potentially far-reaching effects across the banking and investment industries.
The average yield on European investment-grade corporate bonds -- currently around 0.3% -- is lower than bid-ask spreads which analysts use as a proxy for transaction costs and now stand at 0.44 cents on the euro, according to data compiled by Bloomberg.