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2025-09-15 18:01:19
[Expectations of Rate Cuts Trigger European Debt Market, Risk Appetite Soars] ⑴ The cost of insuring European high-yield (junk) corporate bonds against default has fallen to a three-and-a-half-year low, driven by expectations that the US Federal Reserve (Fed) may resume rate cuts, significantly boosting market risk appetite. ⑵ The Fed is widely expected to cut interest rates by 25 basis points on Wednesday (Beijing Time). According to LSEG data, money markets have already priced in the possibility of two more rate cuts by the end of 2025. ⑶ Despite the uncertain economic growth outlook, analysts note that investors are currently more inclined to focus on the potential benefits of loose monetary policy than the risk of slowing growth. ⑷ The iTraxx Europe Crossover Index, which tracks credit default swaps on eurozone junk bonds, fell 1 basis point to 251 basis points, its lowest level since January 2022, indicating growing investor confidence in this risky asset class.
