{"id":47231,"date":"2019-07-15T14:08:31","date_gmt":"2019-07-15T19:08:31","guid":{"rendered":"https:\/\/olduvai.ca\/?p=47231"},"modified":"2019-07-15T14:08:40","modified_gmt":"2019-07-15T19:08:40","slug":"low-yield-no-yield-negative-yield-buy-now-but-dont-forget-to-sell","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=47231","title":{"rendered":"Low Yield, No Yield, Negative Yield&#8211;Buy Now But Don&#8217;t Forget to Sell"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/www.cobdencentre.org\/2019\/07\/low-yield-no-yield-negative-yield-buy-now-but-dont-forget-to-sell\/\">LOW YIELD, NO YIELD, NEGATIVE YIELD \u2013 BUY NOW BUT DON\u2019T FORGET TO SELL<\/a><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>The amount of negative yielding fixed securities has hit a new record<\/li><li>The Federal Reserve and the ECB are expected to resume easing of interest rates<\/li><li>Secondary market liquidity for many fixed income securities is dying<\/li><li>Outstanding debt is setting all-time highs<\/li><\/ul>\n\n\n\n<p>To many onlookers, since the great financial crisis, the world of fixed income securities has become an alien landscape. Yields on government bonds have fallen steadily across all developed markets. As the chart below reveals, there is now a record US$13trln+ of negative yielding fixed income paper, most of it issued by the governments\u2019 of Switzerland, Japan and the Eurozone: \u2013<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"http:\/\/www.cobdencentre.org\/wp-content\/uploads\/2019\/07\/bloomberg-negative-yield-21st-june-2019.png\" alt=\"Bloomberg - Negative Yield - 21st June 2019\" class=\"wp-image-2063\"\/><\/figure>\n\n\n\n<p><em>Source: Bloomberg&nbsp;&nbsp;<\/em><\/p>\n\n\n\n<p>The percentage of Eurozone government bonds with negative yields is now well above 50% (Eur4.3trln) and more than 35% trades with yields which are more negative than the ECB deposit rate (-0,40%). If one adds in investment grade corporates the total amount of negative yielding bonds rises to Eur5.3trln. Earlier this month, German 10yr Bund yields dipped below the deposit rate for the first time, amid expectations that the ECB will cut rates by another 10 basis points, perhaps as early as September.<\/p>\n\n\n\n<p>The idea that one should make a long-term investment in an asset which will, cumulatively, return less at the end of the investment period, seems nonsensical, except in a deflationary environment. With most central banks committed to an inflation target of around 2%, the Chinese proverb, \u2018we live in interesting times,\u2019 springs to mind, yet, negative yielding government bonds are now \u2018normal times\u2019 whilst, to the normal fixed income investor, they are anything but<em>&nbsp;interesting<\/em>. As Keynes famously observed, \u2018Markets can remain irrational longer than I can remain solvent.\u2019 Do not fight this trend, yields will probably turn more negative, especially if the ECB cuts rates and a global recession arrives regardless.<\/p>\n\n\n\n<p>\u00a0\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>LOW YIELD, NO YIELD, NEGATIVE YIELD \u2013 BUY NOW BUT DON\u2019T FORGET TO SELL The amount of negative yielding fixed securities has hit a new record The Federal Reserve and the ECB are expected to resume easing of interest rates Secondary market liquidity for many fixed income securities is dying Outstanding debt is setting all-time [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[7380,14105,233,534],"class_list":["post-47231","post","type-post","status-publish","format-standard","hentry","category-economics","tag-cobden-centre","tag-colin-lloyd","tag-ecb","tag-monetary-policy"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47231","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=47231"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47231\/revisions"}],"predecessor-version":[{"id":47232,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47231\/revisions\/47232"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=47231"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=47231"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=47231"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}