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This is the consequences of quantitative easing of the EU. German government bond (Bund) are not doing better. For example, the yield of 2 year bond is -0.6%. That is right, you pay the government to own their debt. https://bloomberg.com/markets/rates-bonds/government-bonds/germany We are living in an interesting time.
Japan sovereign debt. 40-year bonds at 0.91%???? Who on earth would buy such a thing???
- About 40% are bought / owned by Japan’s central bank (BOJ) as part of their ongoing battle to prop-up the Japanese economy since it fell off a cliff in 1990. https://www.investopedia.com/terms/j/jgb.asp (Consider that a child born in Japan in ‘91 and now 27 years of age would have never witnessed a booming economy and long term bull stock market like the one Japan experienced during the 70s and 80s.)
- I suspect (but can’t verify / confirm) that a few of us own them in small amounts through some of our funds. They’d make a terrific hedging vehicle.
- Hedge funds likely buy some - and than go both long and short depending how they view the evolving Japanese economy.
- Possibly a few pension funds own them.
- Probably a few insurance companies own them.
Buying a sovergn bond is also a play on a nation’s currency. So the value of the Japanese yen vs the U.S. dollar is very much a consideration among traders. Think 40 years is long? Mexico sells 100-year bonds.
Comments
https://bloomberg.com/markets/rates-bonds/government-bonds/germany
We are living in an interesting time.
- I suspect (but can’t verify / confirm) that a few of us own them in small amounts through some of our funds. They’d make a terrific hedging vehicle.
- Hedge funds likely buy some - and than go both long and short depending how they view the evolving Japanese economy.
- Possibly a few pension funds own them.
- Probably a few insurance companies own them.
Buying a sovergn bond is also a play on a nation’s currency. So the value of the Japanese yen vs the U.S. dollar is very much a consideration among traders. Think 40 years is long? Mexico sells 100-year bonds.