June 14, 2024

Negative bond rates penalizes savers and rewards debtors.

Governments and central banks do not want anyone to save their money. They are forcing everyone to spend it. If you save it, you will get penalized.

People are willing to have negative rates because they fear anything else is too risky. Stocks, real estate, non-government bonds, and bank deposits are all too risky.

There is no other place to park large sums of money except in government bonds.

Governments can have their balances reduced by lending out money.

In a deflationary environment, -1% yield would be a good deal for investors.

Weakens the currency to make exports more profitable for the country.

Speculators can make money in a bond that is falling more negative or bet the currency would rise.

Negative rates has had no effect on increasing velocity of money.

Encourages retail investors to pull their money out of the financial system.

There has never been negative governmental bond yield in the history of the world.

Over $10 trillion invested in negative bond yields.

Countries with negative bond rates: Japan, Germany, Denmark, The Netherlands, Austria, Switzerland and Sweden

Negative bond rates are a sign of desperation of central banks and that they are losing control.

Could be a leading indicator of a massive deflationary event.

Who Buys Bonds With A Negative Interest Rate? – Planet Money
Negative yield bonds: Here’s who’s buying – CNBC
Why Would Anyone Buy Negative Interest Rate Bonds? – Motley Fool
https://www.theglobeandmail.com/globe-investor/investor-education/who-would-buy-a-bond-with-a-negative-yield/article23132250/ – Globe and Mail
Who Wants To Buy Europe’s Negative Interest Bonds? – Forbes
Why do investors buy negative yield bonds? – Financial Times
Why the Bond Market Is Yielding Negative and What Negative Yields Mean for You – Pimco
Negative Interest Rates – Bloomberg