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Toma Tomov

11 June 2025
THE INTERNATIONAL ROLE OF THE EURO - BOX
Reverse Yankee bonds
The international role of the euro 2025
English
Details
Abstract
The Box examines the borrowing behaviour of US firms that issue euro-denominated bonds, commonly referred to as "Reverse Yankees," and explores the factors influencing their choice of issuance currency, including the risk-free rate differentials between the US and euro area, credit spreads, and the cost of hedging foreign exchange risk. Empirical evidence suggests that both declining hedged and unhedged borrowing costs in euro provide an incentive for US firms to issue more Reverse Yankee bonds. Changes in expected borrowing costs play an important role for the euro’s appeal as an international funding currency.
JEL Code
F31 : International Economics→International Finance→Foreign Exchange
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
G15 : Financial Economics→General Financial Markets→International Financial Markets
E43 : Macroeconomics and Monetary Economics→Money and Interest Rates→Interest Rates: Determination, Term Structure, and Effects
F34 : International Economics→International Finance→International Lending and Debt Problems
9 January 2025
ECONOMIC BULLETIN - BOX
What’s behind the resilience of US equity prices – market structure, earnings expectations or equity risk premia?
Economic Bulletin Issue 8, 2024
English
Details
Abstract
This box explores the resilience of US equity markets since 2023 in spite of monetary policy tightening and persistent geopolitical tensions. Market dynamics have been driven by strong earnings growth expectations linked to advances in artificial intelligence, particularly for the so-called Magnificent Seven stocks, and by buoyant risk appetite. Elevated valuations and the significant stock market concentration make the US equity market vulnerable to adverse shocks, such as disappointing earnings or macroeconomic surprises.
JEL Code
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
G15 : Financial Economics→General Financial Markets→International Financial Markets
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy