The collapse of Germany’s ruling coalition just after the US election has left the Eurozone’s largest economy in political limbo at a difficult time.

The relationship between government bond yields and swap rates – otherwise known as the swap spread – has been increasingly in focus, with the market’s attention turning to Europe last week as the 10-year German Bund yield traded higher than the 10-year euro swap rate for the first time ever.

In this month's Flash Fixed Income, we look at how bond markets are reacting to Donald Trump's victory in the US election. With Trump's stated policies widely regarded as being inflationary, we expect a bigger divergence in the path for interest rate cuts between the US and Europe that might favour higher quality European credit.

TwentyFour Income Fund Limited (TFIF) was a winner at this year’s Alternative Credit Awards 2024, taking home the award for Fund of the Year (assets under $1bn) at last week’s awards in London.

In the past 10 days the European asset-backed securities (ABS) market has welcomed five debut issuers across multiple jurisdictions and asset classes, with the most notable being Europe’s first public solar green ABS from Enpal.

With Donald Trump’s solid victory helping the dust around the US election result settle faster than many might have expected, investors’ attention has promptly shifted to the potential economic and financial market implications of the new administration.

The challenges facing the German economy are well-documented, with growth remaining sluggish and Purchasing Managers' Indexes (PMIs) - a reliable indicator of future economic activity - continuing to point to ongoing struggles in the manufacturing sector.

In what has been a busy week for macro news in Europe, the latest round of data for the Eurozone delivered a surprise that could have implications for the European Central Bank’s (ECB) interest rate plans.