(Bloomberg) -- It’s a different summer for investors in global bonds.
With positive yields seemingly hard to come by, gone are the days when investors could earn a return on debt by clipping coupons while relaxing on a sunny beach. Rather, they are having to spend their time looking at the frantic market moves and buying longer-dated bonds on the premise of selling at higher and higher prices.
“The continued decline in global yields should keep higher-yielding rates markets bid, and keep investors looking at longer maturities,” said Peter Chatwell, Mizuho International Plc’s head of rates strategy who recommends buying German 30-year bonds. “Current markets suggest that capital gain is at the forefront of minds, rather than the more typical summertime play of sitting back on carry trades.”
The German yield curve turned completely negative earlier this month while those in the U.S. and U.K. inverted Wednesday as investors boost bets that central banks cut interest rates to shore up growth prospects damaged by a global trade war.
Yields on Germany’s 10- and 30-year bonds fell as much as five and seven basis points, respectively, to record lows of -0.70% and -0.26% on Thursday.
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