Who is buying bonds with negative yields? i don't understand how it would work at an auction or in resale unless everything around the world was negative. Why buy a Swiss bond if you can buy a us treasury bond that is not negative. Do they actually have buyers for instruments where the rate is negative? It's just bizarre.
I gave up trying to figure that out. But I think it is central banks that does the buying in order to keep the rates low or negative. Which in turn forces investors to buy stocks. What could possibly go wrong. A few weeks ago I saw some big time fund guy talking about how if we had negative rates here then the S&P would take off to unthinkable levels. I find that hard to believe, but of course I find it hard to believe that we are near all time highs and will probably make new highs this summer.
Thanos was the hero
according to JP Morgan there is 8.3 trillion in negative rate bonds. Japan at 5.3 and Europe at 3. If the central banks are buying these bonds at negative rates, does that mean that there is 8.3 trillion in debt that never has to be payed? does the debt pay itself off? And at what point do they say enough is enough? Why not 20 trillion? MAybe someone smarter than me can explain how this works.
Thanos was the hero
I'd keep a shoe box buried in my back yard first--over negative rate bonds.
I'd keep a shoe box buried in my back yard first--over negative rate bonds. X2 for me
Bonds get negative yields because so many people are buying them that the price climbs beyond the maturity value. Demand is high.
Why? Some entities are required to invest money in specific classes of bonds, so they have no choice. Central banks buy bonds to stimulate economies. Bonds are safer than banks because protection is not limited by insurance caps. Better to have 96% of your money than a much smaller share.
You can make money on a bond with a negative yield if the price of new issue bonds goes up and you sell yours before maturity. Those people that have to buy them will still have to buy them if the price goes even higher so those bought today may appreciate before maturity.
If you have integrity, nothing else matters. If you don't have integrity,
nothing else matters.
Originally Posted by CatFan
But it why not buy the US 10 year which isn't negative versus the 10 year German one that is?
Some people or entities don't have the option on which bonds they buy. Some apparently think the German bond will be worth more in 5 years than the US bond. Trading bonds is a substantially different game than buying them and holding to maturity.
If you have integrity, nothing else matters. If you don't have integrity,
nothing else matters.
Sounds like it is a game best left for institutions. Hard to wrap your head sound something where you will take a loss unless the rates drop further and your bond price increases enough to surpass the yield.
I agree completely
If you have integrity, nothing else matters. If you don't have integrity,
nothing else matters.
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