Negative-Yielding Debt Tops $17 Trillion - Bubble Keeps Expanding

-edited

On August 29, negative-yielding debt topped the $17 trillion mark. Nearly all of that is outside the US.

Bloomberg comments on the Unstoppable Surge in Negative Yields.

The global stock of negative-yielding debt is now in excess of $17 trillion as rising market volatility lends extra force to this year’s unprecedented bond rally.

Thirty percent of all investment-grade securities now bear sub-zero yields, meaning that investors who acquire the debt and hold it to maturity are guaranteed to make a loss. Yet buyers are still piling in, seeking to benefit from further increases in bond prices and favorable cross-currency hedging rates—or at least to avoid greater losses elsewhere.

The negative-yield phenomenon is turning financial markets on their head—raising the specter of a bond bubble, draining pension funds of a valuable source of income and incentivizing riskier companies to mortgage their assets. At the same time, banks are having to reassure citizens that they won’t suddenly start charging customers to store their money.

Negative-Yielding Debt On December 31, 2018

The article has a nice autoplay month-by-month graphic of the rise of negative-yielding debt.

Since December 31, 2018

  • Negative-yielding debt in the Americas has fallen from $332.4 billion to $40.3 billion, a decline of $291.1 billion.
  • Negative-yielding debt worldwide has risen from $8.3 trillion to $17.0 trillion, an increase of $8.7 trillion.

30% of investment-grade (non-junk) debt now has a negative yield.

Amazing.

This is of course an amazing bubble. But for now, there is no catalyst to pop it.

Mike "Mish" Shedlock

Comments (10)
No. 1-10
lol
lol

Central banks are the only buyers of all that worthless paper,why?Because they have acres and acres of flourishing money trees,where bill fall off like leaves,that 's why they own all bonds,most stocks,all the gold'silver on the planet,biggest buyers of oil and virtually all commodities for over a decade.The central banks and there printing presses will eventually own...…….well....everything...…...until they don't!

thimk
thimk

@lol - the massive amount of recent global liquidity injections needs a "home".

Blurtman
Blurtman

To negative infinity and beyond!

Webej
Webej

Mish, something is reversed on the Americas.

bradw2k
bradw2k

Is there anything left but bubbles? Sovereign bonds now. Later, gold. Then the rules change, good luck guessing how.

Ted R
Ted R

Mish: Any idea what will finally pop this bubble?

BornInZion
BornInZion

Every unit of fiat currency, every bond floated, every derivative on any market, every option, all of it everywhere, is owned at all times, but the owner can change through mutual transactions. What we really need is more owners! We should allow robots to own and trade debt instruments. Just think, a whole new class of greater fools' that we can create from next to nothing! Elon Musk, where are you?

Six000mileyear
Six000mileyear

The amount of attention given to the absurd condition of negative yields means the bond bubble is close to popping.

Sandiw
Sandiw

How quickly Bloomburg has forgotten his "secret" pal (Obama), is the one causing all those "Trillions" to be spent when they infiltrated and over ran our government with the "Third World Coop". We all know how the "Brown express and other packaging companies were used to over load the eastern part of the U.S. with Nancy Pelosi and her,..AHEM... FEMALE JUNIOR League LEADERS of the Third World Coop (Crew) with all the democrats and traitorous Septic Pool Republicans. Or maybe he has developed Alzheimer's?

themonosynaptic
themonosynaptic

"Negative-yielding debt in the Americas has fallen from $332.4 billion to $40.3 billion, a decline of $291.1 billion."

Looks like it is the other way around.