Tuesday, August 16, 2016

Jeepers, Wally



Well, that's one way to force people to hold onto bonds.  Negative yields.  They're probably not buying at that rate. Unless they're Chinese and figure on owning the entire USG in the long run.
"Worries over the global growth outlook, further fueled by Brexit, have continued to support demand for higher-quality sovereign paper in June," Fitch said. "Widespread adoption of unconventional monetary policies, including large-scale bond-buying programs and negative deposit rates, have driven the large increases in negative-yielding debt seen this year."

[...]

With its aggressive easing policies, Japan is by far the global leader in negative yields, at $7.9 trillion, up 18 percent for the month. German 10-year bunds also swung into negative territory — they traded at -0.115 percent Wednesday — as Germany and France now have more than $1 trillion in negative-yielding debt. Switzerland's yields also have turned negative across the board, with the 10-year trading most recently at -0.5274 percent.

Despite the Brexit-related turmoil, U.K. bond yields have stayed positive, with the 10-year at 0.95 percent.

A search for safe havens has driven the willingness of institutional investors buying sovereign debt to accept the negative yields.

  CNBC
Negative yields = safe? Yeah, ok. You're right. I don't understand finance.

...but hey, do what you want...you will anyway.

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