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2025-07-28 18:23:15
[Historical low! US-EU trade agreement boosts confidence, eurozone junk bond default risk hits three-year low] ⑴ After the United States and the European Union reached a trade agreement, the cost of credit default swaps (CDS) for euro-denominated junk bonds fell to the lowest level in more than three years. ⑵ As an insurance against bond defaults, the decline in the cost of credit default swaps indicates that market concerns about risks have been significantly alleviated. ⑶ Analysts at Rabobank pointed out that the trade agreement is "positive in eliminating uncertainty." ⑷ According to S&P Global Market Intelligence data, the iTraxx Europe Crossover Index, which tracks eurozone junk bond CDS, is currently trading at 266 basis points. ⑸ This level was last seen in January 2022, marking a significant increase in market confidence in the credit of European companies. ⑹ The conclusion of the agreement avoided more serious trade conflicts and provided a relatively stable operating environment for European companies. ⑺ The positive market response indicates that Europe's credit market may remain optimistic for some time to come.
