Europe’s Era of Negative-Yielding Debt Is Coming to an End
- Prospect of rate hikes from ECB this year triggers repricing
- German 5-year yield turned positive for first time since 2018
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Negative yields are becoming an endangered species even in Europe, long the heartland for bonds that you have to pay to hold.
A swathe of yields across the region turned positive in the past week as traders accelerated bets on European Central Bank policy tightening to fight record inflation. Money markets now expect the ECB to lift its deposit rate by 50 basis points in 2022 to take it back to 0% for the first time in almost eight years.