(Bloomberg) -- European junk bonds are heading for their worst monthly performance since March 2020, as expectations that U.S. interest rates are poised for liftoff and simmering tensions over Ukraine weigh on risky assets. 

The Bloomberg High Yield Euro Index, which tracks more than 600 euro-denominated bonds across Europe, is down 0.86% as of Jan. 25, with four trading days left.

While small by comparison, that’s the worst showing since the 12.9% rout seen 22 months ago when governments were enforcing strict lockdowns to stem the spread of the emerging coronavirus pandemic.

The slump in the index comes as investors anticipate central bank rate hikes with the market’s focus trained on today’s meeting of U.S. Federal Reserve policy makers. 

Adding to the more cautious mood are concerns about the risk of an outbreak of hostilities in the Ukraine, even though Moscow denies it intends to invade the country.

Last week, European high yield funds saw outflows of over $1.1 billion, the highest in six weeks, according to EPFR data cited by Bank of America. 

The riskiest type of European bank bonds, known as Additional Tier 1s or CoCos, have also had a tough start to the year. A Bloomberg multi-currency index that tracks the sector is down about -1.17%, on track for its worst monthly performance since July 2020.

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