$7 Trillion In Bonds Now Have Negative Yields

Tyler Durden's picture


Just ten days ago, in the aftermath of the BOJ's -0.1% NIRP announcement, we reported that after more than one year after the ECB unleashed NIRP, the total number of government bonds with negative yields to a staggering $3 trillion, a number which nearly doubled overnight to $5.5 trillion.

Overnight in a historic event, the latest consequence of the BOJ losing control, the yield on Japan's 10Y JGB dropped below zero for the first time, in the process joining Switzerland as the only other country (for now) with a NIRPing benchmark 10Y treasury.


And, as Bloomberg calculates, this means that as of this moment, $7 trillion or about 30% of all sovereign bonds, are yielding negative rates, implying "investors" have to pay governments for the privilege of holding their money. It also means that in the past 10 days a record $1.5 trillion in global treasurys have gone from having a plus to a minus sign in front of their yield.

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 02/09/2016 - 10:34 | 7160840 Father Thyme
Father Thyme's picture

Aaaaand it's gone.

Tue, 02/09/2016 - 10:36 | 7160862 Cognitive Dissonance
Cognitive Dissonance's picture

Suddenly my 'pays-no-interest-sitting-at-the-bottom-of-the-lake' PMs are looking mighty attractive.


Tue, 02/09/2016 - 10:39 | 7160879 NoDebt
NoDebt's picture

And they said the debt could never be paid off.  Bah!  It's paying itself off now.

Thanks for "investing" in government bonds.  Suckers.

Tue, 02/09/2016 - 10:41 | 7160893 J Jason Djfmam
J Jason Djfmam's picture

"Thank you for playing."

Tue, 02/09/2016 - 10:45 | 7160918 bania
bania's picture

I think they call these bonds "Purple NIRPles"

Tue, 02/09/2016 - 11:05 | 7161054 AnonymousCitizen
AnonymousCitizen's picture

Just so I understand...I have to pay interest for the privilege of having the possibility of losing my investment? Hmmm...nope.

Tue, 02/09/2016 - 11:40 | 7161248 Buckaroo Banzai
Buckaroo Banzai's picture

Just for fun I decided to see what negative interest rate, compounded yearly, would result in losing half your money over 30 years.

The answer is, - 2.25%

Tue, 02/09/2016 - 11:57 | 7161328 tarsubil
tarsubil's picture

I'd like to see a calculation done for the relationship between the money made by falling rates and the money lost due to negative rates. Wouldn't that show the apex of the government bond bubble?

Tue, 02/09/2016 - 10:54 | 7160966 jaxville
jaxville's picture

  Sometimes I wish I was a bond trader instead of a precious metals dealer.  Like when a customer buys about a tonne of silver and I have to carry it to their vehicle. 

  Bonds are now reducing the burden of carrying a heavy wallet.

Tue, 02/09/2016 - 10:58 | 7160999 all-priced-in
all-priced-in's picture

You do know that lower rates = higher bond value.


The people that purchased these bonds before they went negative have a gain on them. So there were a good investment.


I am still trying to figure out why the heck anyone would pay more for a bond today than they will recover in interest and principal in the future.


The only thing I can come up with is they must think there will be a greater fool come along and be willing to pay them even more -


Someday soon people are going to be saying WTF were we thinking!



Tue, 02/09/2016 - 12:12 | 7161393 Han Cholo
Han Cholo's picture

You do know that lower rates = higher bond value.



Well that just confused the hell out of me. Can you elaborate?

Tue, 02/09/2016 - 14:25 | 7161982 all-priced-in
all-priced-in's picture

When interest rates go down - the value of bonds you hold goes up.


It is just the way it is - the opposite is also true


If interest rates go up the value of bonds you hold goes down.



Tue, 02/09/2016 - 13:38 | 7161719 jaxville
jaxville's picture

  I know that but bonds coming due today need to be rolled over.  How many can you roll over at negative rates knowing that at some point yields must rise making the value of negative yield bonds even more negative?

  The bonds that have a decent yield are closer to maturity.  Eventually the pool of bonds will average a lower and lower yield. 

 I suppose a bond trader can find a profit in all this but going forward "low risk" bonds are becoming an oxymoron. 

Tue, 02/09/2016 - 10:40 | 7160884 Father Thyme
Father Thyme's picture

With South Park being the best financial advisor: Never Trust A Bankster.

Tue, 02/09/2016 - 10:39 | 7160874 TideFighter
TideFighter's picture

Looks like the "short-covering" came in early, hahahahahahahaha.

Tue, 02/09/2016 - 10:35 | 7160843 ParkAveFlasher
ParkAveFlasher's picture

You mean, $7 trillion in promises are potentially overstated?  Never could have guessed it.

Tue, 02/09/2016 - 10:38 | 7160870 Ghordius
Ghordius's picture

ahhh, I see you changed "worthless" to "potentially overstated"

well, it all depends in what currency, in a Currency War. watch Iran. not even repatriating the newly unfrozen accounts


Tue, 02/09/2016 - 10:54 | 7160899 ParkAveFlasher
ParkAveFlasher's picture

I have to keep reminding myself that "worthless to me" does not mean "worthless to everyone".  I'm just a humble drone, who has seen The Light, and it is Good.

Iran has been doing this a long time, possibly millenia.  I am sure there are texts in someone's possession that hold simple poetic wisdoms that, when applied at the right time in the right circumstance, unlock the massive doors of wealth in any market.  Possibly in an Iranian's hands, possibly a Russian's, possibly an American's.  The fact is, there is nothing new under this Sun or any other, and as long as men are birthed from mothers, there are new dimensions to discover and new lands of promise.

I'm up, bitchez.

Tue, 02/09/2016 - 10:56 | 7160982 Ghordius
Ghordius's picture

+1, you put your finger on the whole reason why trade exists

my third cow is less worth to me then to you. your second horse is less worth to you then to me. what happens? we exchange one horse for one cow. once. and that price... might never repeat itself

Carl Menger did just find the right math for this formulation that indeed was already known to the ancient Persians, and, Persians being Persians, in poetry, of course


Tue, 02/09/2016 - 10:39 | 7160878 jaxville
jaxville's picture

  Thank goodness for insurance companies and large trusts who are basically captive buyers of that stuff.  Is that the sound of another shoe preparing to drop?

Tue, 02/09/2016 - 10:41 | 7160892 ToSoft4Truth
ToSoft4Truth's picture

At least social security is in lock-box. 

Tue, 02/09/2016 - 10:35 | 7160847 wildbad
wildbad's picture

well THAT escalated quickly

Tue, 02/09/2016 - 10:35 | 7160850 MaxMax
MaxMax's picture

Well, I guess that is one way to wind down the debt.

Tue, 02/09/2016 - 10:36 | 7160853 new game
new game's picture

flight to security? huh. world gone nucking futs IMFO...

Tue, 02/09/2016 - 10:36 | 7160858 Panic Mode
Panic Mode's picture

This will spread faster than Zika virus. 

Tue, 02/09/2016 - 10:43 | 7160905 Rainman
Rainman's picture

Zika ... another Big Pharma hoax


Tue, 02/09/2016 - 10:36 | 7160860 FreeShitter
FreeShitter's picture

Keep stacking..

Tue, 02/09/2016 - 10:36 | 7160861 Bangin7GramRocks
Bangin7GramRocks's picture

Nattering nabobs of negativism.

Tue, 02/09/2016 - 10:37 | 7160865 wildbad
wildbad's picture

german lesson continued:  Das perfekte Stürm

Tue, 02/09/2016 - 10:37 | 7160869 Going Loco
Going Loco's picture

If this ever spills over into retail deposits then we know they will definitely have to ban cash. How quickly can they put that into effect?

Tue, 02/09/2016 - 10:39 | 7160872 Bam_Man
Bam_Man's picture

These are "Reserve Assets".


More like "Trading Sardines".

Tue, 02/09/2016 - 10:39 | 7160876 ToSoft4Truth
ToSoft4Truth's picture

How do we profit from this? 

Tue, 02/09/2016 - 10:41 | 7160888 NoDebt
NoDebt's picture

I would have thought that was pretty obvious.  You buy more bonds and sell them for a profit when they go ever negativer.

Tue, 02/09/2016 - 10:48 | 7160928 Pool Shark
Pool Shark's picture



Cash, Bonds, Gold...


[Any other questions?]

Tue, 02/09/2016 - 10:42 | 7160904 jaxville
jaxville's picture

   Sell everything and buy gold, a case of whiskey and a lot of popcorn. 

Tue, 02/09/2016 - 10:58 | 7161001 Ghordius
Ghordius's picture

"How do we profit from this?"

unless you don't have serious dough to put on this table, I'm sorry, no profit to be had, here


Tue, 02/09/2016 - 10:39 | 7160877 Watermaker
Watermaker's picture

It's an insurance premium, good deal! Who wouldn't want to pay to have the japanese government look after their money?

Tue, 02/09/2016 - 10:40 | 7160880 Dr. Engali
Dr. Engali's picture

Bonds? What a barbaric concept. All they do is sit there, taking your money.

Tue, 02/09/2016 - 10:41 | 7160891 Tinky
Tinky's picture

We joke about this now, but just wait a few months...

Tue, 02/09/2016 - 10:42 | 7160895 NoDebt
NoDebt's picture

Winning comment of the thread.  That's fucking fantastic.  I'm totally stealing that.

Tue, 02/09/2016 - 10:45 | 7160915 new game
new game's picture

i think i'm not participating. no 401, check. nothing invested whatsoever, check. no pension, check.

goverment retirement, hmmm-at risk, but could become mandatory bonds from everyones paycheck...

guess i still have skin in the game as long as i still breathing, ha...


Tue, 02/09/2016 - 10:47 | 7160934 new game
new game's picture

tinky, point well taken...

thinking katrina

sobering thoughts...

Tue, 02/09/2016 - 10:46 | 7160921 Seasmoke
Seasmoke's picture

Best post ever !!!!

Tue, 02/09/2016 - 11:00 | 7161011 FrankieGoesToHo...
FrankieGoesToHollywood's picture

Unless a CB comes along and goes wacko with a QE program to buy those losing bonds for a bigger loss for them but profit for you.  Greater fool theory: CBs are run by fools.

Tue, 02/09/2016 - 10:41 | 7160885 new game
new game's picture

getting like a presure cooker getting ready to blow...

capitulation coming, 3, 2, 1...

Tue, 02/09/2016 - 10:42 | 7160894 Government need...
Government needs you to pay taxes's picture

The system is fucked, and the question is who will control the reset?  If it's .gov, then the reset WILL NOT BE to gold.  If .gov fails, the reset will be to local barter, maybe silver since there is enough for everyone to own some.  .Gov wants to world onto a digi-currency, where they can define the slope of the yield curve based on their political priority.  Thus, investing in nigger development will yield a PHAT return, whereas investing in an energy deemed 'dirty' will be hit with full NIRP.

Tue, 02/09/2016 - 13:17 | 7161647 MASTER OF UNIVERSE

I control the reset, but don't count on America's survival or that of the European Union. Both America, and the European Union, are going to pay through the nose for their incessant criminality over the last half century. Like the Bible says, you will wish that you had a millstone about your neck and that you were dropped in the middle of the ocean before the economic dust settles the remaining survivors into the MASTER OF UNIVERSE Old World Order, motherfuckers.


Up yours, Wall Street, it's payback time.

Tue, 02/09/2016 - 10:43 | 7160908 Chuckster
Chuckster's picture

I love this so much...I might get a nut.  I hope when it's over the dollar goes thru the roof while the Rothschilds and Rockefellers sing "Brother can you spare a dime?"  Angela should scream: "Pull the God damn ripcord!"  At what point in this mess does Oby call a press conference to re-assure his faithful before they enter the gates of hell?

Tue, 02/09/2016 - 10:44 | 7160909 stitch-rock
stitch-rock's picture

Soveign bonds?

Ha, Im in unicorn tears...much more stable and real.


Tue, 02/09/2016 - 10:45 | 7160917 Debugas
Debugas's picture

can anybody explain to me why would anyone lend money at negative interest rate ?

Why can not they simply hold cash at zero rate ?

Do NOT follow this link or you will be banned from the site!