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The universe of negative-yielding debt has ballooned to its largest level since the aftermath of the US election last November as investors stare down the first round of the French vote at the weekend, underlining the tempering of the reflation trade and search for haven assets.

The value of European and Japanese government bonds and bills — as well as euro-denominated corporate debt — trading with a subzero yield climbed to $10.823tn on April 20, up from $10.193tn a month earlier, according to Tradeweb. It marked the highest level since mid-November, when it last eclipsed $11tn.

The data showed an uptick in the percentage of negative-yielding Japanese government bonds, to 69 per cent from 63 per cent on March 22, and German bunds, to 76 per cent from 72 per cent over the same period.

Haven sovereign bonds have rallied since the middle of March, as inflation and growth expectations have eased. The yield on benchmark 10-year US Treasuries has fallen 40 basis points, while 10-year bunds have dropped 24 basis points since highs touched in March. Yields fall as bond prices rise.

Copyright The Financial Times Limited 2017. All rights reserved.

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