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Negative Rates Aren’t Helping Much


It’s clear negative interest rates aren’t encouraging people and businesses to spend at the levels required to achieve strong growth, especially once you account for inflation.

The market value of all government bonds trading at negative rates worldwide is over $8 trillion, revealing just how hard some central bankers are pushing down returns in the hopes it will fuel spending. Yet once you subtract inflation, the market value shrinks to only $6.8 trillion according to data from JP Morgan Chase, the Wall Street Journal reports.

That’s only half of what it was a few months ago.

And almost as if on cue, the 10-year US Treasury yield fell to its lowest level since May 2013 last Friday, reaching 1.639%, while yields on similar bonds in Germany and Japan dropped to all-time lows—the 10-year rates in Germany are nearly below zero. [WSJ]