Negative rates now part of the financial landscape
Bond markets’ journey through the looking glass has befuddled many investors
Making an investment that is guaranteed to lose money sounds like something that would cost you your job. But in bond markets, it has become a fact of life.
Bonds worth $15-trillion – about a quarter of the debt issued by governments and companies around the world – are currently trading with negative yields. That means prices are so high that investors are certain to get back less than they paid, via interest and principal, if they hold the bond to maturity. They are, in effect, paying someone to look after their money.