>Euro Bounce
All of this could become more pronounced as traders become confident that the euro’s rally has further to run, with demand for options that target a stronger euro around its highest point for the year.

The surge in inflows from the US has helped drive overall bond issuance run out of Europe to pass the €1 trillion mark in record time.

It helps that investors are able to use reverse Yankees to get access to blue-chip US corporates without having direct exposure to the dollar and Treasury movements. That’s ideal for those who expect the country to avoid a recession but still don’t want to deal with the day-to-day volatility.

Some caution that the Trump turbulence may just end up being exported to Europe. The spike in reverse Yankees means the euro credit market will likely be more sensitive to US politics, Bank of America (BAC) strategists led by Barnaby Martin wrote in a note earlier this month.

For others, they still offer some value. “I prefer reverse Yankees to US dollar-denominated bonds because I’d rather own German Bunds than US Treasuries,” says Gordon Shannon, a portfolio manager at TwentyFour Asset Management. “For now I think the govvies might be the biggest sources of volatility in corporate bonds.”

Back | Go to board

Board:

/news/

Thread:

Giant US companies are rushing to Europe to borrow money