Mapping the opportunity

Today’s graph maps the EUR fixed income market by yield and outstanding market value. The largest part of the EUR bond market remains the sovereign bond market. Across all durations, govie’s now generate average yields above 3%. The yield pickup provided by Investment Grade bonds especially in the financial space appears limited for the additional risk taken. Investment Grade bonds in non-financials now generate yields above 4.5%.  High yield and leveraged loans look attractive for investors willing to take the credit risk in today’s environment. We conclude that selectivity remains key in a bond market starting to show more juicy nominal yields.