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European Bond Risk Falls to Lowest in a Decade Amid Ample Supply
A key measure of bond market risk in Europe has fallen to the lowest in a decade as the scarcity of high-quality securities that plagued the region’s money markets for years continues to dissipate. The spread between 10-year German interest-rate swaps and equivalent bond yields has narrowed to 23 basis points, the tightest level since 2014. The latest leg of the move followed news on Friday that Germany, the region’s most credit-worthy borrower, plans to sell more debt next year. The gap typically indicates how expensive it is for investors to hedge their government bond holdings. It has been tightening over the ... (full story)