A question worth asking considering the rather large amount of them knocking about at the moment. According to JPM, the total universe of government bonds traded with a negative yield was $3.6tr last week or 16 per cent of the JPM Global Government Bond Index. It’s an answer in itself, really. Anyway, here’s a list of those willing/ forced to buy those negative yielding government bonds from JPM’s Niko Panigirtzoglou:

1) Investors who fear or expect deflation tend to find nominal bonds with even negative yields attractive as long as expected deflation makes real yields positive. In a deflationary environment investors tend to shift away from real into nominal assets. During the previous two decades in Japan, this took the form of a shift away from equities and real estate into cash and nominal JGBs.
2) Investors who speculate on currency appreciation, for example investors buying Swiss or Danish government bonds to speculate on CHF or DKK currency appreciation.
3) Investors who expect capital gains from central bank easing i.e. rate cuts or QE.

This will be a mostly charted recap of where exactly in the rabbit hole of negative yielding corp bonds we are following last week’s knee-shaking sale of some brand new negative yielders by non-state owned Henkel and Sanofi.
It was a first. It was exciting.
From Morgan Stanley, with our emphasis:

We estimate that a total of €467bln of EUR IG bonds now have sub-zero yields. Of this, €313bln of bonds are iBoxx index-eligible, split 39% and 61% between financials and nonfinancials. Thus, ~25% of the EUR IG index is now in negative yield territory, with the concentration increasing to 33% in the CSPP-eligible universe.

Negative Yields: Issuers With Largest Amount of Negative Yielding EUR BondsIssuers With Largest Amount of Negative Yielding EUR Bonds – click to enlarge.
A quick reminder here that the CSPP is the European Central Bank’s corporate bond buying programme and that the ECB is pushing down borrowing costs for governments and corporates.
That done, here’s MS’s distribution of negative bonds across across non-financial sectors:

Negative Yields: EUR IG Non-Fin Sector DistributionEUR IG Non-Fin Sector Distribution – click to enlarge.
Here’s the overall distribution across countries:

Negative Yields: EUR IG – Country DistributionEUR IG – Country Distribution – click to enlarge.

When x happens, yields fall — Rule 1?
It’s not a search for yield, it’s a search for safety — Potential Rule 2?
Two charts to make the point for us once again from the good folks at BofAML’s relative value department:

Click to enlarge.
 You could also pop in here and have a look at Credit Suisse’s roughly similar argument (and the state of the negatively rate inspired corporate bond market). CS’s point has to do with two phases of negative rates in European fixed income, as demonstrated by the German yield curve, which say that a yield hunt has really not been the right strategy in EU fixed income — “Taken as a snapshot in time, negative (or very low positive) yields should of course see investors rotating out of such assets into higher yielding assets, and that has happened for short periods of time within the past 2.5 years. But implicitly yields are a hold-to-maturity concept, and actual returns can, for certain periods, deviate quite far from that implied by yields as we have seen in recent years.”

Click to enlarge.

And as BofAML say, while also noting the “best years for stocks in recent memory, 2009 (26.

Here’s a rough piece of calculation based on the last few years of news: When x happens, yields fall. An example of this post-GFC rule-of-thumb was Brexit and its fallout.
The potential lesson from said rule is that yield hunting isn’t fun anymore, say Credit Suisse’s William Porter and team, with our emphasis:
Negative (or very low) 10-year Bund yields have not been a boon for European credit markets, based on our analysis of recent history. For as long as they continue, we would warn against strong yield-seeking behaviour as a medium-term strategy. The time to hunt for yield as a dominant strategy (rather than as a short-term trade) might actually be when yields start to rise.
And to set the scene… look at the absolute state of the corporate bond market right now. The cold pull of negativity is now a reality in euro corporate bonds as they follow the path trod by their Swiss cousins. Some 20 per cent of IG corporates are trading with a negative yield, a stat presumably pushed along by the ECB’s corporate bond buying programme:

Running out of places to find a positive yield
And fine, the US market does provide some solace. But, per CS again, “excluding the USD IG corporate bond market, we can see that 25% of bonds are now negative yielding and 80% have a yield less than 1%”.

You’ll have noticed that the yen and Nikkei were displeased yesterday. Like throw your toys out of the pram because you didn’t get what you wanted displeased. Like one of the worst one day JPY moves in the past decade displeased.

What they didn’t get, and what prompted that tantrum, was any auld bit of easing from the Bank of Japan.
And here are eight potential reasons why the BoJ disappointed, from SocGen:

1) there is a risk that the market may once again perceive limits to the effectiveness of monetary policy if additional QQE were to be implemented;
2) the BoJ pushed back the timing to achieve the 2% inflation target but did not implement additional QQE… [The BoJ also said that Japan’s economy has ‘continued its modest recovery trend’ so…] If the BoJ is to implement additional QQE by end-2016, it will probably need to admit that the Japanese economy is not “recovering”.