The European debt issued in 2021 with investment grade (at the least one step above junk grade) has destroyed 23,500 million euros in total compared to the value that was placed, according to Bloomberg estimates.
The economic information agency details that 80% of these bonds, 956 of the 1,147 issued since the beginning of the year, have fallen in price, and therefore their interest in the secondary market has risen, as sales predominate, after increasing medium-term inflation expectations due to the rise in the cost of energy and bottlenecks in the industry, as a consequence of the strong recovery in demand after hibernation due to the pandemic , and, therefore, as an increase theoretically approaches of official interest rates by the European Central Bank (ECB) , which keeps them at the historical low of 0% to prevent financing conditions from stifling reconstruction.
These losses of European investment grade bonds contradict the official positions that continue to defend that the current peak in inflation is temporary, and also the relative tranquility that is being experienced in the public debt market.
The yield of the German Bund, with a 10-year maturity, has risen in recent weeks but remains negative, close to -0.1%, while the interest required on the reference bond in Spain slightly exceeds 0, 5% , but it is still far from the 1.22% in which it registered the point of greatest tension of the Covid crisis.
The future that is listed on the average inflation of the five years following 2026, and that serves as a forecast for the evolution of prices in the medium term, is at highs in September 2014, close to 1.93%, after not stopping to rise from the 0.7% in which it sank in March 2020.
This expectation and the widespread sales of bonds are fueling the debate on the ECB’s debt purchases , the other main tool of the eurozone’s monetary policy emphasized in an emergency program to favor the exit from the crisis caused by the coronavirus pandemic.