Category: 3. Business

The overall yield of the catastrophe bond market, or the total coupon return, fell to just under 8.70% as of November 28th 2025, but the decline in the cat bond market insurance risk spread, or discount margin, was slower in the last month, the latest data from Plenum Investments shows.

With the seasonal spread tightening caused by the Atlantic hurricane season all but over in November, the main contributing factor to the decline continued to be the elevated levels of investor demand for catastrophe bond investments, as well as the excess cash in the market from returns earned by cat bond fund strategies, it appears.

This was despite high and growing demand for reinsurance coverage from the catastrophe bond market, as issuance was continuing to build and demand remained in excess of the pipeline for most of November.

But, with the pipeline of new cat bond issuance still increasing, there are hopes the market may become more balanced and spreads level off, while seasonality related to the hurricane season is now over.

Supply-demand factors, related to the cat bond market evidently experiencing a high supply of capital in part due to returns generated by funds, as well as high demand for new investments over recent weeks, is continuing to apply pressure though.

The overall yield of the catastrophe bond market had sat at 11.03% at the end of June 2025, then declined to 10.81% by August 1st, then 10.22% as of August 29th and further still to 9.43% as of September 26th, then fell to 8.81% by the end of October.

The further decline to roughly 8.69% as of November 28th 2025 therefore represents a meaningful slowing of the decline in cat bond risk spreads across the market.

You can analyse the yield of the catastrophe bond market over time in our interactive chart, which uses data kindly shared by Plenum Investments.

Commenting on developments in the cat bond market coupon over the last month, Plenum Investments explained, “In November, reinsurance premiums continued to decline despite high demand for insurance coverage. However, the rate of decline compared to the previous month has noticeably slowed down.

“The decrease in yields is expected to further moderate, as we anticipate that the CAT bond supply will remain high and the seasonal effect will reverse after the hurricane season.”

Plenum Investments also noted that secondary trading has also begun to increase further in the cat bond market, contributing towards a more balanced relationship between supply and demand as primary issuance is rising again at a pace sufficient to satisfy more of the capacity that has been available.

The insurance risk spread, or discount margin of the catastrophe bond market, having declined to 5.48% at September 26th 2025, then 4.99% at October 31st 2025, fell further to 4.88% at November 28th 2025.

The risk-free return on collateral remained relatively stable, only reducing slightly from 3.82% at October 31st to 3.80% at November 28th.

However, the expected loss of the cat bond market as measured using Plenum Investment’s methodology rose from 2.25% at October 31st to stand at 2.33% at November 28th 2025, presumably with recent issues driving that increase in the main.

Which means one of the metrics worth tracking in the catastrophe bond market, of the amount of risk spread available over the expected loss, has now narrowed to only 2.56% when rounded up.

That is down more than a percentage point since the end of November 2024 and the average spread above expected loss of the cat bond market, by Plenum’s data, has now sunk to a level that hasn’t been seen since November 15th 2019.

At 4.88%, the average insurance risk spread of the cat bond market, the discount margin, has now declined by 16% in the last year and stands roughly 27% lower than two years ago.

If you compare the average risk spread of today with the one the market experienced at the end of November 2022, bearing in mind that is when spreads spiked higher after hurricane Ian, the decline over the last three years is now approximately 55%.

All of which serves to demonstrate how cyclical the catastrophe bond market is, but also how it responds to both threats such as hurricane Ian that spiked risk spreads higher, and then to capital availability as we see today after the strong years of elevated returns that have been experienced.

Analyse catastrophe bond market yields over time using this chart.

(Bloomberg) — US stock futures drifted higher at the start of a week in which the Federal Reserve is widely expected to cut interest rates.

Contracts on the S&P 500 rose 0.1% as the US benchmark continued to nudge toward a record high. Europe’s Stoxx 600 was little changed. Asian stocks advanced for a fifth day, with mainland Chinese equities outperforming on better-than-expected export data.

Stocks have rebounded in recent weeks to approach their October all-time highs, with a cut at Wednesday’s Fed meeting almost fully priced in. Still, the advance has been jittery as uncertainty over the pace of easing in 2026 and wariness about the durability of an AI-driven rally keep sentiment in check.

For Daniel Murray, EFG Asset Management’s deputy chief investment officer and global head of research, a broader set of supportive catalysts is driving markets higher alongside expectations of monetary policy easing.

“First, the economic environment looks resilient. Second, it’s the line of least resistance, consistent with usually strong December seasonals,” Murray said. “Third, year-end positioning means that some investors who have not had a full weight to US stocks are now trying to catch up.”

Japan led declines in global bonds after the country’s economy shrank in the three months through September, while its relations with China continued to deteriorate. The data add a layer of complexity to the Bank of Japan’s policy decision next week, but are unlikely to divert it from its gradual hiking path.

The dollar was little changed, while Bitcoin traded below $92,000.

Corporate News

US President Donald Trump raised potential antitrust concerns around Netflix Inc.’s planned $72 billion acquisition of Warner Bros. Discovery Inc., noting that the market share of the combined entity may pose problems. L’Oreal SA is doubling its stake in Galderma Group AG to 20%, as the French cosmetics company increases its bet on skincare drugs. Unilever Plc’s spinoff The Magnum Ice Cream Co. opened below the reference price in its market debut on Monday, Pop Mart International Group Ltd. shares dropped the most in over six weeks amid renewed concern that the Chinese toymaker’s US sales growth momentum is slowing. Some of the main moves in markets:

Stocks

The Stoxx Europe 600 was little changed as of 8:35 a.m. London time S&P 500 futures rose 0.1% Nasdaq 100 futures rose 0.2% Futures on the Dow Jones Industrial Average were little changed The MSCI Asia Pacific Index rose 0.2% The MSCI Emerging Markets Index was little changed Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1648 The Japanese yen was little changed at 155.44 per dollar The offshore yuan was unchanged at 7.0692 per dollar The British pound was little changed at $1.3322 Cryptocurrencies

Bitcoin rose 1.5% to $91,624.92 Ether rose 1.3% to $3,126.16 Bonds

The yield on 10-year Treasuries advanced one basis point to 4.14% Germany’s 10-year yield advanced two basis points to 2.82% Britain’s 10-year yield advanced four basis points to 4.51% Commodities

Brent crude rose 0.3% to $63.94 a barrel Spot gold rose 0.2% to $4,206.09 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Shikhar Balwani.

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Renewables are the cheapest form of power generation. But this doesn’t tell the full story. What about the costs of grids, storage and back-up ?

WindEurope’s latest study done in cooperation with Hitachi Energy shows that even when accounting for the grids, storage and back-up, a system running on high shares of renewables is the cheapest by far.

WindEurope and Hitachi Energy have mapped out the total system costs of 5 energy scenarios. 4 scenarios that deliver net zero and one ‘slow transition’ scenario where Europe does not meet its climate targets.

Scenarios relying more heavily on nuclear, hydrogen or CCS would all be more costly than a renewables-based scenario. By 2050 the differences in costs range from €487bn to €860bn.

And a renewables-based energy system is €1.6tn less expensive than a system where Europe fails to deliver on net zero. The €1.6tn difference is largely due to residual fuel costs and the costs of carbon in the slow transition scenario. Already by 2035 the renewables scenario saves €331bn compared to the slow transition scenario.

The cumulative savings from running our energy system on renewables are equivalent to what Europe collectively spends on healthcare each year. And 9% of the European Union’s GDP.

The renewables-based energy system entails a major increase in the share of electricity in the energy mix. And that electrification requires major investment, especially in heavy industry. We’ve factored this into the study. Even when accounting for investment in electrification a renewables-based scenario is the cheapest overall.

A system based on high shares of renewables also ensures system stability and has a big energy security margin with energy production far outstripping demand.

And a renewables-based energy system is the most resilient to external shocks such as the one we experienced following Russia’s invasion of Ukraine. Of all the scenarios the renewables scenario has the lowest dependency on energy fuel imports.  Energy fuel imports are only 22% of the total energy supply in 2050, compared to 54% in the slow transition scenario.

A renewables-based energy system also comes with additional benefits. Jobs in particular. The European wind industry employs 440,000 people today and will employ 600,000 by 2030.

There is no upside to diminished climate ambition. There is no upside to slow walking renewables.

As the IEA said in its 2025 World Energy Outlook, we are in the Age of Electricity. And renewables are the best placed to deliver that. Let’s lean into it – this is our competitive edge as Europeans.

This transition is already underway. As Europe looks ahead to 2050, it is revealing to think what our energy system looked like 25 years ago. Back in 2000 the share of wind and solar in Europe’s electricity was a combined 0.8%. It’s 30% today. And Europe’s emissions are down by nearly 1/3 on 2000 while the economy has grown 45%. Let’s build on this success.

See the study