Company bonds handed investors the biggest loss in six months in Europe this week on concern borrowing costs will rise as the Federal Reserve starts paring stimulus.
Investment-grade notes in euros forfeited an average 0.6 percent this week, the most since the period ended June 21, according to Bloomberg bond index data. The average yield on the debt jumped six basis points to a seven-week high of 1.9 percent, the data show.
Investors are withdrawing from global bond markets on speculation a strengthening U.S. recovery will spur the Fed to scale back asset purchases before the end of the year. American employers added 185,000 workers last month, putting payroll gains on track for the best year since 2005, according to economists surveyed by Bloomberg before data due today.
“Everyone is getting excited about the job numbers looking stronger,” said Simon Ballard, head of credit strategy at National Australia Bank Ltd. in London. “Investors are worried the Fed will start to taper its bond buying even this month and that’s pushing up yields around the globe.”
The cost of insuring corporate bonds rose for the first time in six weeks, with the Markit iTraxx Europe index of credit-default swaps on 125 investment-grade companies climbing 3.8 basis points this week to 83 basis points, the highest since Nov. 13.
Microsoft Corp. led 23 billion euros ($31 billion) of corporate issuance in Europe, up from 15.6 billion last week, according to data compiled by Bloomberg. The Redmond, Washington-based company issued 3.5 billion euros of notes as part of an $8 billion sale in dollars and euros, a record offering from the world’s largest software maker, the data show.
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