What "Coordinated Recovery"? Global Negative Yielding Debt Hits One Year High Of $7.4 Trillion

Tyler Durden's picture

Two weeks ago, we were surprised to find that despite the recent "growth promise" of what has been called a coordinated global recovery, the market value of bonds yielding less than 0% had quietly jumped by a quarter in just one month to the highest since October 2016.

Since then, the paradoxical divergence between the reported "strong" state of the "reflating" global economy and the amount of negative yielding debt, has only grown, and as JPM reports as of Friday, Sept. 1, the global market value of government bonds trading with negative yield within the JPM GBI Broad index rose to $7.4 trillion, up 60% from its low of $4.6 trillion at the beginning of the year.

Some more details from JPM:

We calculate the market value by multiplying the dirty price with the amount outstanding for each bond within JPM GBI Broad Index and then convert it to US dollars at today’s exchange rate. The market value of bonds trading with negative yield,including central banks’ purchases, stands at 30% of the total JPM GBI Broad index.

What makes the latest rise in negative yielding debt especially bizarre is that it was mainly driven by Japan, where 10-year government bond yields have fallen significantly over the past month and have turned negative this week for first time since the US presidential election, even as the Bank of Japan has twice in the past month reduced the amount of JGB debt it purchases in the open market in the 5-to-10 year bucket, following on Friday, by a 30BN yen reduction of buying in the 3-to-5 year debt range.

As a result, the total universe of Japanese bonds trading with negative yield within the JPM global government bond index (GBI Broad) now stands at $4.6tr, or 62% of the outstanding amount. The remaining government bonds trading with negative yields worth $2.8 trillion are from Europe, of which more than half are from France and Germany.

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Fester's picture

This is good, right?

ET's picture

Physical Gold and Silver demand is rising and inventories are shrinking.

The cryptos are selling off and the money heading into the Precious Metals before the cryptos reach their intrinsic value of zero.


doctor10's picture

In a surveillance society all opportunity for arbitrage is stolen by the sociopsyopaths pre-occupied with going through everybodies bank accounts, real estate holdings, tax returns and health records.

Not much business can be done profitably-at the end of the day its why interest rates -at least in 100% traceable accountable taxable regulatable and ultimately takable dollars are basically 0% give or take a few fractions of a percent. FWIW if you want to borrow BTC now interest rates can be 12-13%!!

"value" is anonymity and privacy in conduct, thought and action-one of the consequences of which is enhanced ability to keep the fruits of your own labor. It also is the only means through productivity can increase across society. Electronic currencies actually fulfilling those needs will be the most valuable-there is yet to emerge one that clearly does so.

Ask East Germany and the Soviet Union exactly how well a surveillance society worked out during the 20th century. The 21st is no different in that regard

DjangoCat's picture

Tezos makes big moves forward, both in terms of energy use and consensus based evolution. 

Got to be nutty to borrow BTC if you are going off the reservation into fiat.  Dumb move.  But I suppose staying in the crypto space there are opportunities for gain.

Who lends Bitcoin?

Francis Marx's picture

They never are going to pay back. Dont buy the government bonds. Fools only.

That can is going to be kicked until the whole ally tips backwards and thousand of cans will be rolling back.

Haitian Snackout's picture

Its not a can of worms but a warehouse stacked with pallets of cans of worms.

Bam_Man's picture

This how the "G-8" fiat currencies will die.
One by one.

Let it Go's picture

It spells doom with a capital D! It should not be a surprise in our current global economy that behind the curtain central bankers could be busy manipulating currencies so they trade in a narrow range that will not rock the boat. I contend they are keeping the dollar from moving higher.

Like many Americans, I have railed against our growing debt and questioned whether it would destroy the dollar, however, when looking at the miserable alternative currencies before us the dollar is without a doubt king. We must not underestimate the advantage the dollar has being the world's reserve currency or the size of debt floating across the globe comprised in dollar based agreements.


HRH Feant2's picture

There is no way this ends well. No way in hell.

harrybrown's picture

if you cant hold it you dont own it, if it has counter party risk you've already lost your money

get zee gold ( & silver) & stay outside the beast system

Death to the satanist zionist filthy swine money changers

DjangoCat's picture

You know, you need to get out and about more.  There are still good people around.  They may not get the story, but you can help.  

Go tell it on the mountain.

brewing_it's picture

You got bailed in.

ludwigvmises's picture

Negative yields = positive for RISK ASSETS. Stocks will goto the moon over the next 10 years.

DjangoCat's picture

To the moon in worthless USD.  To the floor in anything real.

DjangoCat's picture

Today's move by China to link oil-yuan-gold is huge.  

Watch out now.

Ron_Mexico's picture

If all interest rates go to zero, then haven't we effectively eliminated usury? Hey, the Koran is for it and so am I.

Retired Guy's picture

Ever have to pay a loan back? Debt sucks. Zero interest is to help you get into debt but nobody is going to get you out.


Giant Meteor's picture

I am fairly certain, the "WE", doesn't enter into the equation ..

Point being, the money system is a dying death star, getting sucked into a black hole ..

War it will be