Bloomberg comments on the Unstoppable Surge in Negative Yields.

The global stock of negative-yielding debt is now in excess of $17 trillion as rising market volatility lends extra force to this year’s unprecedented bond rally.

Thirty percent of all investment-grade securities now bear sub-zero yields, meaning that investors who acquire the debt and hold it to maturity are guaranteed to make a loss. Yet buyers are still piling in, seeking to benefit from further increases in bond prices and favorable cross-currency hedging rates—or at least to avoid greater losses elsewhere.

The negative-yield phenomenon is turning financial markets on their head—raising the specter of a bond bubble, draining pension funds of a valuable source of income and incentivizing riskier companies to mortgage their assets. At the same time, banks are having to reassure citizens that they won’t suddenly start charging customers to store their money.

Negative-Yielding Debt On December 31, 2018

Image placeholder title

RECOMMENDED ARTICLES

The article has a nice autoplay month-by-month graphic of the rise of negative-yielding debt.

Since December 31, 2018

  • Negative-yielding debt in the Americas has fallen from $332.4 billion to $40.3 billion, a decline of $291.1 billion.
  • Negative-yielding debt worldwide has risen from $8.3 trillion to $17.0 trillion, an increase of $8.7 trillion.

30% of investment-grade (non-junk) debt now has a negative yield.

Amazing.

This is of course an amazing bubble. But for now, there is no catalyst to pop it.

Mike "Mish" Shedlock

Negative Yield Debt Hits Record $15 Trillion, Up $1 Trillion in 2 Business Days

Negative yield debt madness accelerates. A new record high breached $15 trillion on Monday.

Making Sense of 100-Yr Bonds yielding 0% and 30-Yr Bonds With Negative Yield

Over 50% of European gov't bonds have a negative yield. Globally there's $15 trillion in negative-yield debt.

$250 Trillion in Global Debt: How Can That Be Paid back?

Global debt just topped $250 trillion. Please ponder paying the interest on that, let alone the principal.

Mechanics of Absurdity, Negative Yields, and Other Tweets of the Day

Here are some interesting Tweets that discuss negative yields, the threat of Trump, debt financing, and other topics.

"Financial Vandalism" of Low and Negative-Yield Bonds Wreck Pension Plans

Unnaturally Low and negative yield bond yields are wrecking pension plans.

Monetary Madness: Inverted Negative Yields in Germany, Negative Rate Mortgages

Monetary madness hit new extremes. Mortgage rates are -0.5% in Denmark. In Germany, a negative-yield curve inverts.

Three Massive Bubbles in 17 Years: When Will This One Bust? A 60% Decline Coming?

John Hussman's presents a message no one wants to hear because nearly everyone is too busy believing for the third time in 17 years that "It's different this time". Last week Hussman wrote about Valuations, Suff

US at the Top of the Heap: Global 10-Year Bond Yield Comparison

In a global comparison of 10-year government bonds, three countries have negative-yields and France is on the cusp.

ECB to Keep Negative Rates for "At Least" Another Year: Treasuries Rally

The ECB will end its asset purchase program in Dec. but will keep negative rates "at least through the summer of 2019".