Still struggling to understand why anyone would buy a bond with a negative yield ?

4/3/15

Still struggling to understand why anyone would buy a bond with a negative yield ?

 

It can be tough to get your head around it all . Just remember, demand is strong and supply is weak; and just because yields are negative that does mean that they can't go more negative; and we know that as yields go down, prices go up. Still not making much sense ? Never mind .... for the reasons behind these factors and a nice little synopsis, see "FT Alphaville" in the Financial Times (p.28). For a more detailed analysis, also in the Financial Times, see "Insight", (p.30). 

China's changing priorities .....

 

"beyondbrics" in the Financial Times (p.28) looks at how China's monetary policy now revolves more around managing its mountain of debt than say, GDP growth or currency considerations. The numbers involved are a little disturbing.......

And on the wider issue of debt .....

For a really chastening take on how debt levels the world over have gone mad, have a look at Jeremy Warner's "Viewpoint" in the Daily Telegraph (p.B2). He argues that since global debt has increased 17% since 2007, we have plainly learnt no lessons from the last financial crisis and sooner or later it will all end in tears. Happy days ...

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