The Only Way is UP!

Generali

For those that think that yields have got a way to fall (from JP Morgan):

Splitting by region, the stock of Japanese government bonds trading with negative yield reached $6.1tr. This brought the proportion of JGBs trading at negative yields to 78% of the total outstanding amount.

In the Euro area, $2.4tr of government bonds trade with negative yields, or around 36% of all Euro area government bonds. Within the Euro area, the proportion of bonds trading at negative yields is the highest in Germany, or 77%. Further, we find that $682bn of Euro area government bonds with maturities greater than 2 years trade at yields below -40bp, making these bonds ineligible for ECB purchases.

78% of JGBs and 77% of DBs having a negative yield isn't low enough then what would be?

The only way is UP!

cells

Who is buying the $8.5 trillion of bonds at negative yields? And if you were them and sold those bonds what would you buy in its place as you need to be in something?

Generali

cells wrote: »

Who is buying the $8.5 trillion of bonds at negative yields? And if you were them and sold those bonds what would you buy in its place as you need to be in something?

Mostly central banks and funds and companies that are required to hold. Japan is a different case of course.

tincans6

Thrugelmir wrote: »

Germany's 3rd largest export market though. The UK makes a significant contribution to their current account trade surplus.

Here's an interesting factoid.

Germany has a trade surplus with 175 out of 239* countries.

It has a trade deficit with Ireland Euro £5bn (I'd imagine their economy will take a fair old hit on Brexit) and its trade surplus with the UK is 50bn Euros which is only just exceeded by its surplus with USA.

Brexit will be a falling tide that leaves all ships a bit lower in the water.

The country which gave the world Richard Cobden and Adam Smith voting for isolation.

How did it come to this ?

CLAPTON

tincans6 wrote: »

Here's an interesting factoid.

Germany has a trade surplus with 175 out of 239* countries.

It has a trade deficit with Ireland Euro £5bn (I'd imagine their economy will take a fair old hit on Brexit) and its trade surplus with the UK is 50bn Euros which is only just exceeded by its surplus with USA.

Brexit will be a falling tide that leaves all ships a bit lower in the water.

The country which gave the world Richard Cobden and Adam Smith voting for isolation.

How did it come to this ?

yes indeed

how cobden would have railed against the tariff and non tariff barriers erected by the EU : the 50 years of refusing to trade with the poor developing nations in agriculural products which has kept them in un-necessary poverty (and encouraged extremist, war and migration) and damaged the people of europe as well.

he would take solice in our determination to trade as freely as possible with the whole world.

but he probably would have asked : why did it take so long?

tincans6

CLAPTON wrote: »

yes indeed

how cobden would have railed against the tariff and non tariff barriers erected by the EU : the 50 years of refusing to trade with the poor developing nations in agriculural products which has kept them in un-necessary poverty (and encouraged extremist, war and migration) and damaged the people of europe as well.

he would take solice in our determination to trade as freely as possible with the whole world.

but he probably would have asked : why did it take so long?

I'm guessing your knowledge of Cobden doesn't extend to the Cobden-Chevalier treaty in the face of bitter hostility from the British press.

You have a good point about EU protectionism relating to third people countries.

Do you really think its likely that the UK will reverse this on Brexit ?

It's just that all the leaders of the Brexit camp have said they will support farmers as much as the CAP does. Have I got this wrong ?

michaels

UK govt bond yields go negative for the first time ever today

cells

Like I've been saying for years the real rate of return on debt will be close to zero. Now to lend a billion Euro to the Germans over 10 years requires you to pay them 1.3 million euro a year! On top of the risk and inflation


10 year T Bills 1.5%
10 year Italian 1.25%
10 year Spanish 1.15%
10 year gilts 0.80%
10 year French 0.16%
10 year bunds -0.13%
10 year Jap Bonds -0.25%

Jonbvn

cells wrote: »

Like I've been saying for years the real rate of return on debt will be close to zero. Now to lend a billion Euro to the Germans over 10 years requires you to pay them 1.3 million euro a year! On top of the risk and inflation

This just seems so wrong to me (is it just me?), such that it seems like a new paradigm.

On a personal note, if the UK base rate goes below zero, will my tracker mortgage follow it? Will check T&C's....

cells

Jonbvn wrote: »

This just seems so wrong to me (is it just me?), such that it seems like a new paradigm.

people have this odd world view that the world we live in is old and has been around for such a long time and we can draw conclusions of what the norm is by looking hundreds of years into the past when really the modern world is only about 1 human generation old.

And during that one human generation the west has steadily realised and experienced falling real rates.