$5.5 Trillion In Government Bonds Now Have Negative Yields, Covering 23% Of Global GDP

Tyler Durden's picture

First thing this morning, after the BOJ's announcement of negative rates which promptly pulled all treasury yields around the globle lower, we asked a simple question: how big large the global negative rate bond universe grow to?

Promptly thereafter the FT was kind enough to do the math: the answer - a record $5.5 trilion in government bonds are now trading at negative yields.


This means that about about one quarter of all global bondholders will end up paying their government custodians for the pleasure of parking their cash in the "safety" of government bonds.

The FT adds that "fears for economic deterioration and increasingly abnormal policies adopted by global central banks to ward off the threat of deflation have resulted in a bizarre scenario in which investors pay governments to hold their money.

Figures from JPMorgan show that negative rates, once considered only theoretically possible, now account for one quarter of the index for government bonds.


On Friday, yields on Japanese, French and German bonds hit record lows after the Bank of Japan decided to adopt negative interest rates, just over one week after governor Haruhiko Kuroda ruled the policy out.


In Europe, the first region to adopt negative interest rates, around half of all government bonds carry sub-zero yields, led by Germany, Finland and Switzerland, where negative yields extend all the way to bonds with 10 year maturity.

The chart below demonstrates how unprecedented today's bond situation is:as of this morning at least 13 countries had 2Y yields that were negative, and 10 nations could boast with negative rates all the way to the 5 Year mark:


And just to round out the picture, the WSJ adds that over a fifth of global gross domestic product, or 23.1%, will now be produced in countries that have negative interest rates, noting that the ECB and BOJ together are responsible for around 21% of global GDP. Swiss, Swedish and Danish GDP add up to less than 2.5% of the global total.


So far the moves to negative interest rates have been relatively shallow, with almost all set at less than minus 1%. But even if the size of the move isn’t dramatic, the fact that banks are willing to do this is.

The conclusion: "Never before have so many central banks explored sub-zero territory at the same time."

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Joe Cool's picture

What will they think of next?  Paying someone to hold your money!  Wait...

Enceladus's picture

No puny FOOL! double negative rates!!

Yes We Can. But Lets Not.'s picture

I look forward to soon financing home purchase with a nifty negative rate mortgage.  Or isn't that how it works?

JRobby's picture

Which version of "We have lost control of this thing and we are not at all sure what will happen next" do you want to hear????

This fucked shit show is terminating and there are a thousand plus "versions that deny itl" in double speak issued on a daily basis.

Yes We Can. But Lets Not.'s picture

We may even be entering TripleSpeak territory.

El Oregonian's picture

I love that Orwellian double-speak "Negative Yield"..... Isn't that rich? How do you yield anything when a 'negative' means MINUS!


-The Yield nazi

Richard Chesler's picture

Paid to borrow

where do I sign up?

NidStyles's picture

((("oi vey, dat's a lot of shekels")))




justdues's picture

Yes we Can, I genuinely (mis) read that as TribalSpeak territory .

Buckaroo Banzai's picture
What do you intend to do sir? They're already on NIRP.
They are?
Yes, sir.
Oh. Then as of this moment, they're on double secret NIRP!
Ignatius's picture

The conclusion: "Never before have so many central banks explored sub-zero territory at the same time."

Like they just discovered stealing as a vocation?

TheDanimal's picture

You can pay me to hold your money.  I'll gladly take that burden for a small fee.

JuliaS's picture

... and people though Fukushima was a disaster!

RibbitFreedom's picture

It will all end in tears.   It's interesting how the first thing we learn in school is to never divide by zero. 

Soul Glow's picture

This brings up a good point.  When a computer/calculator is asked to divide by zero, it causes the program to terminate, resulting in a special not-a-number value, freezes via infinite loop, or a crash.

Yes We Can. But Lets Not.'s picture

Its like Y2K for bond markets.

qweston content's picture

Doesn't Negative yield = deflation the very thing governments and central bankers are trying to avoid? Am I missing something?

layman_please's picture

good question. to use the common logic (i know, i know), i would say the negative yields would drive the money out of bonds to somewhere it would earn something, but only if we wouldn't have all that risk in the markets. so hypothetically speaking, CB-s would start printing money so they could buy the bonds being sold. as all the printing is nothing else than lending currency into existence, and as we have the negative rates, they would also have to print the interest to pay to the borrower. that would increase the money supply and if money would really escape the relative safety of the bonds, it might even end up in the real economy if the public will finally lose confidence. that would increase the money velocity, which is the other main prerequisites for the inflation. of course this would apply if there would be any real markets, or for that matter any logic, left in the world.

JuliaS's picture

That's why they over it straight into the negative. A zero would indeed mess up quite a few algos.

doggis's picture


BurningFuld's picture

I'll borrow a trillion at -0.5%. AND I even guarantee I can pay it back.  WHAT THE FUCK IS GOING ON HERE!!!!!!

_ConanTheLibertarian_'s picture

What could possibly go wrong.


Soul Glow's picture

Central Banks are the new Lehman Brothers and Bear Sterns of the world, only on steroids.

_ConanTheLibertarian_'s picture

"how big large the global negative rate bond universe grow to?"

Yes, how big and large?

Dsyno's picture

"how big large the global negative rate bond universe grow to?"

Or better yet... "How large will the global negative-rate bond universe grow?"

Looks like we've got Boris writing our articles now.

RadioFlyer's picture
RadioFlyer (not verified) Jan 29, 2016 1:18 PM

Chump change to what it will become by August.

I need more asshats's picture

Hey here in Canada, when your mate is down you help him oot. That's all this bond game is aboot.

People helping people.

conraddobler's picture

LOL many times before this time in history if you asked an economist if there could even be negative rates most of them would just laugh at you and now the jokes on all of us it seems.


Dr. Engali's picture

I want some of that self servicing debt. Where can I get some of that?

_ConanTheLibertarian_'s picture

Would you like some NPLs with that?

JamaicaJim's picture

It's gone beyond the stringing them up/hanging them by their heels.

It's come to this.....tip of the hat to Tarantino


justdues's picture

JamaicaJim, hat tip to Tarrantino for Inglurious basturds ?? he used to make great creative fun movies , now he has just devolved to Hollywood shillin for anti-white Anglo-Saxon racist hate .


Sudden Debt's picture

It's that or most countries would default on their debt.

And suddenly, they can loan an extra 2 to 3% more also.

It's the last kick of the can.

After that, it's all montizing arround the clock and inflation allover the globe.


yrad's picture

Ernest Hemingway — ‘How did you go bankrupt? Two ways. Gradually, then suddenly.’

Joe Cool's picture

Exactly, But you forgot capital controls, bail-ins, and Greece-type withdrawl laws on bank accounts...Ah!You probably didn't forget...

Anything to keep this bond bull market alive and well...It's been what 35 years!!!

jtmo3's picture

Bullshit. How many last kick of the cans have we been through in 8 years?

Let The Wurlitzer Play's picture

The real trade is to short this debt and take the coupon until it collapses.



Yes We Can. But Lets Not.'s picture

Do it, get rich, and you'll be the subject of Michael Lewis' next book.

ThroxxOfVron's picture

"The real trade is to short this debt and take the coupon until it collapses. "


The Governments are short the Citiznery and charging their debt holders to keep the funding for their bureaucracies from collapsing.

This is all about bureaucracies and corporate welfare queens protecting themselves at the expense of everything/everyone and anything/anyone else. 

It is a circular game of sequestration and theft perpetuated by the Oligarchy and the captured government bureaucracies which are acting to protect each other at the expense of the Citizenry/Consumers that BOTH are supposed to serve..

BOTH the Oligarchs and the governments bureacracies are acting as oppressors against and parasites on their host nations.

hongdo's picture

To bad I won't live long enough to see this discussed along with tulips.

Enceladus's picture

Why are you 98 years old? hold on its a commin

Headline WSJ 2017 " With only 18% of Govt debt trading with positive yields one asks 'How much lower can we go?'

Yes We Can. But Lets Not.'s picture

Aww crap.  That planted in my mind the image of Janet Yellen in a bikini trying to shimmy under the really-low-interest-rate-limbo-bar...

Something like this http://bit.ly/1SOrpSu only not as pretty

Joe Cool's picture

Might take a nibble or two at these clobbered mining stocks...It's like gold's trading at $250 pre-2001...It's insane...It's incredible...It's unbelievable...No it's the Frankenmarket!

falak pema's picture

Haha.. the day Greece's sovereign bonds have negative rates is the day it becomes compulsory for every government to say : Debt is ASSET !

Hahaha ! C'mon Greece with negative rate bonds just print and let the CBs cover your ass !

SelfGov's picture

Degrowth is exactly what Gaia needs from our consumptive and destructive economy.

strangeglove's picture

If ya likes ya Money. ya can keeps ya Money

No no no All ya Money belongs to US

Useless shit it is, Nirp is really calling in the Currency am I wrong?

Seasmoke's picture

So the more I borrow. The more they pay me ????