Monthly Archives: February 2015

Negative mortgage rates in Denmark; $3.6 trillion of negative yield debt

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“With negative interest rates in Germany, Switzerland, Ireland, Belgium, and Denmark, it was about time that we saw negative mortgage rates in Europe as well. In January, as much as $3.6 trillion of debt in Europe and Japan traded at negative yields. Unprecedented bond buying by the European Central Bank (the ECB) and Bank of Japan (the BOJ) has resulted in a manipulation of global capital markets that could lead to another major asset bubble.  The situation has gotten so out of hand that not only are interest rates -0.2% at the ECB’s overnight deposit facility, but commercial banks are also lending to individuals at negative rates.”

http://finance.yahoo.com/news/negative-mortgage-rates-denmark-3-210020766.html

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Corporate bond rates go negative

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“In an unprecedented event, the yield on Nestle’s corporate debt went negative this week.  That means investors are essentially willing to pay for the right to park their cash in the safety of the Swiss chocolate company. The bonds might as well come with a note saying: ‘In Nestle we trust.’ All of this is a sign of the unusual times we all live in thanks to never-seen-before central bank policy. After all, normally bond investors are paid to provide financing, not the other way around. So what’s sparking this latest fad in finance? Central bankers around the world are experimenting with new recipes aimed at jump starting sluggish economies.”

http://money.cnn.com/2015/02/05/investing/nestle-corporate-bonds-negative-rates/

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Negative Yields on Eurozone Sovereign Bonds Becoming New Normal

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“On Wednesday, Finland became the first nation in the region to pay a negative yield on five-year debt sold at auction, suggesting that investors are unperturbed by the country’s weak economic expansion and its dependence on troubled Eastern Europe.  German government bonds offer negative yields on maturities up to six years, according to Tradeweb, as do bonds issued by Denmark. Five-year government debt carries a negative yield in the Netherlands, Austria, Sweden and Finland, and four-year government debt in France and Belgium.  In Switzerland, bonds with a maturity of up to a staggering 13 years offer less than zero in terms of yield.”

http://www.wsj.com/articles/finland-pays-negative-yield-on-five-year-debt-1423057657

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The World’s Central Banks Blink

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“More than six years after the onset of the Global Financial Crisis, central banks are being forced to fight a sudden battle against disinflation amid the ongoing silent war against deflation.  Over the past couple of weeks, a number of central banks have shifted to a dovish stance on the future direction of interest rates, if not outright monetary easing.  Although the slowing global economy is the primary factor behind their about-face in policymaking, the collapse in crude oil prices along with anticipation of other central banks’ future moves is what’s driven their timing.  Many of these moves have caught a lot of people, including traders, economists and other financial experts, by surprise.”

http://www.investingdaily.com/22052/the-worlds-central-banks-blink-2/

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