​Negative Rates Black Hole: Div Yield Swaps, Hedging Via Futures Appear Logical

With 50-year euro swap rates yielding below 1% and nearly a third of outstanding bonds providing negative yield, market participants expect the ratio of long-term European dividend swaps versus spot becoming the next to be hit, resulting in dividend yields moving lower. According to market participants, the logical way to trade this development is via dividend yield swaps, or by buying Eurostoxx 50 futures and hedging with long-dated dividend futures.