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2026-02-18 20:45:05
[AI Panic Eases + Rising Rate Cut Expectations Lead to Lower Default Costs for Eurozone Credit Bonds] ⑴ As market concerns related to artificial intelligence gradually eased and the prospect of rate cuts by the Federal Reserve and the Bank of England strengthened, the default protection cost for eurozone credit bonds fell significantly on Wednesday. ⑵ Data from S&P Global Market Intelligence showed that the iTraxx Europe Crossover Index, which tracks credit default swaps on euro high-yield bonds, fell 3 basis points to 247 basis points. This index is an important indicator of market appetite for credit risk of high-risk companies. ⑶ The iTraxx Europe Main Index, which tracks euro investment-grade bond CDS, also fell 1 basis point to 52 basis points. The simultaneous decline in both indices reflects an overall improvement in the credit environment. ⑷ This improvement in credit conditions was mainly due to the easing of price pressures signaled by the latest inflation data from the US and UK. Increased market expectations for rate cuts by major central banks in the coming months provided support for risk assets.
