Tag Archives: negative rates

Submitted by Nicole Foss via The Automatic Earth blog, Part 1 Here. History teaches us that central authorities dislike escape routes, at least for the majority, and are therefore prone to closing them, so that control of a limited money supply can remain in the hands of the very few. In the 1930s, gold was the escape route, so gold was confiscated. As Alan Greenspan wrote in 1966: In the absence of the gold...

[unable to retrieve full-text content]While subtle, the general public loss of faith in central banking has been obvious to anyone who has simply kept their eyes open: it started in Japan where in February hardware stores were reported that consumers were hoarding cash, as confirmed by the spike in demand for safes, "a place where the interest rate on cash is always zero, no matter what the central bank does."

[unable to retrieve full-text content]It’s a sign the world is getting used to negative interest rates when what once seemed bizarre starts looking like the norm. Consider Switzerland, where more and more companies are taking out insurance policies to protect their cash hoards from theft or damage.

[unable to retrieve full-text content]As momentum builds in the developing deflationary spiral, we are seeing increasingly desperate measures to keep the global credit ponzi scheme from its inevitable conclusion. Credit bubbles are dynamic — they must grow continually or implode — hence they require ever more money to be lent into existence.

Negative Consumer Financing Rates in Germany Things are increasingly upside down in the brave new centrally planned world: thanks to negative deposit rates central banks have put an explicit cost on saving, while in various instances, such as taking out a mortgage in Denmark and the Netherlands, the bank actually pays the borrower, thus rewarding living beyond one’s means. Curiously, it was just a month ago when an...

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...

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...

Netherlands 10Y Yield For the first time in Dutch history, 10Y government bond yields have turned negative (-0.001% intraday) closing at 0.00%… Click to enlarge. Joining Switzerland, Japan, Germany, and Denmark… Pushing Global NIRP bonds over the $13 trillion! Click to enlarge. Chart: Bloomberg

“Some market and economic volatility can be expected as this process unfolds,” Carney said in a televised statement in London after the referendum result. His comments followed Prime Minister David Cameron’s announcement that he will step down this year, which will inject political uncertainty into an already volatile period. His full announcement is below and his statement can be found here: [embedded content]...

As the “deflationary supernova” sweeps across the world, dragging bond yields to zero-and-beyond, even the almighty omniscent Federal Reserve has been forced to capitulate as the ‘cheapness’ of Treasury bonds lures the world’s yield-hunters dragging it ever closer to the negative rate realities of Switzerland, Japan, and Germany. As rate-hike odds collapse, along with The Fed’s credibility, so investors are...