Many government bonds go into minus after the action of Switzerland
investors are strongly
nervous, but so far they are willing to
spend money buying some
government bonds. This is the last
fashion in finance – to buy everything,
is now in the red.
Yields on government
bonds in Europe and Japan goes
«Water with negative values.”
Bondholders basically ready to accept the loss, simply to keep at
these assets. They think that as long as better
lose a few cents you spend
money on something else.
"It is basically a fee
for fears"- says Nicholas Colas,
chief market strategist at
ConvergEx. "Fear of deflation, fear
instability in other markets and the general
fear engulfed investors".
Just look at the
Switzerland, where bond yields
It was negative, and now has dropped even more
– after on Thursday the central
Bank country “threw a bomb” on investors,
getting rid of the ceiling for the currency.
Now, the Swiss franc is free
traded against the euro. But Switzerland is not alone
in the negative consequences of decisions
its National Bank. The yield on short-term
Belgian government bonds,
Denmark, France, Germany, Japan and
Netherlands – all below zero.
the bank tries to get people to spend
and put more money instead,
to keep their money in a bank or
investing in government bonds. And investors
at this time of buying these safe
assets, lowering their yields lower.
Fearing deflation, the ECB
is preparing to launch a massive new
incentive programs. But him
“Printing machine” may reduce
bond yields even more. Think
such, for example, if all of Spain
their economic problems
be able to sell five-year bonds
less than 1%, German bonds will go
minus – at 0.05%, although this is not an awful lot.
"It’s amazing. All thinking: Are there
Do we really have a functioning
the global banking system, when the stakes
almost nil?" – sets
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