World of Negative Debt Expands to One-Fifth of Global Market
Financial repression is alive and well.
(Bloomberg) -- Financial repression is alive and well after a decade of monetary stimulus. Investors shopping for investment-grade debt around the world are being greeted with below-zero yields in almost one-fifth of the market.
That’s the highest proportion in 16 months, according to data compiled by Bloomberg.
In the wake of an unexpectedly ultra-dovish shift by the Federal Reserve and weak European data, many investors are reassessing the outlook for growth. That’s sparking demand for safe-haven assets, which helped trigger an inversion of the U.S. yield curve on Friday -- a dynamic that itself is compounding market fears.
The bond rally sent a Bloomberg index tracking outstanding negative-yielding debt past $10 trillion on Friday. It edged up again on Monday, and is hovering at the highest level since September 2017.
The total now accounts for more than 19 percent of the market value of the Bloomberg Barclays Global Aggregate Bond Index, a benchmark of global investment-grade debt comprising everything from Treasuries to corporate and emerging-market issues.
--With assistance from Phil Kuntz.
To contact the reporter on this story: Samuel Potter in London at spotter33@bloomberg.net
To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, Cecile Gutscher, Sid Verma
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