16% Of Global Government Bonds Now Have A Negative Yield: Here Is Who's Buying It

...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.

...Investors who speculate on currency appreciation.

...Investors who expect capital gains from central bank easing i.e. rate cuts or QE.

...Central banks can buy bonds with negative yields. For example, the ECB stated that its QE program will encompass purchases of nominal bonds with negative yields. The ECB funds its bond purchases at a depo rate of -20bp so buying bonds with slightly negative yields is still a positive carry trade.

...Banks buy bonds with negative yields to escape negative depo rates such as those by the ECB, SNB and the Danish central bank.

...a broken financial system now clearly in its terminal phase, where prudent behavior is punished outright, while spending money one doesn't have, and will never be able to repay, becomes the most rewarded activity.


Hoosier's note: I suggest that you read this article.