New Zealand Goes Negative!

 

Negative

Interest Rates

Coming to a Country near You!?

New Zealand Sees First Negative Bond Yield as Rate-Cut Bets Rise

September 9, 2020

Bloomberg

Stephen Spratt

The nation’s April 2023 bond yield dropped as much as 6.5 basis points with mid-level yields touching -0.006%. Swap markets are already pricing for the Reserve Bank of New Zealand to cut by 50 basis points to -0.25% by the fourth quarter of next year.

The South Pacific country joins markets from Europe to Asia with negative yielding bonds. Yields on Japanese sovereign debt are negative out to the nine year maturity while in Germany the whole yield curve to 30-years is sub-zero.

DYI:  When the next stock, corporate bond and economic downturn arrives expect negative rates to follow suit as the Fed’s desperate to pump the house of cards back up.  Don’t be surprised when that day does arrive rates as far out to the 10 year Treasury bond going negative and the 30 Treasury bond below 0.50%!  When is the question!  All that can be said is sooner rather than later.  Remember stock and corporate bond markets especially high yield and junk are MASSIVELY overvalued!  This is a lousy time to invest for the long haul in stock and corporate bonds.  Better values are ahead so hang onto your cash and precious metals.

Till Next Time

DYI