The Economist (March 9)
“The spread of exotic grains is evidence that globalisation works.” You may mock quinoa and other hip foods, but they are welcome sign “of rising prosperity and expanding choice. The spread of better farming techniques has raised yields, helping humanity feed itself despite a rising population.” In contrast, “plans to erect trade barriers and possibly start a trade war” deserve derision. They “would make the world poorer and hungrier.”
Tags: Exotic grains, Expanding choice, Farming, Globalization, Humanity, Population, Prosperity, Quinoa, Trade barriers, Trade war, Yields
The Independent (July 3)
“The economic threat facing the world is bigger than Brexit…. Something remarkable, and disturbing, has happened in recent days that carries a worrying message about the future of the world economy: the plunge in yields. They are lower now than they have ever been before – yes, ever – and they keep on falling. And the message they carry is that there will be a world-wide recession.”
Financial Times (May 20)
“The plunge in yields on corporate and sovereign bonds in Europe and Asia — the value of bonds with a negative yield is nearly $10tn, according to Fitch — has sent investors racing into the US market.” This surging demand “has allowed companies to issue debt at lower yields, though US yields are still more attractive than in other parts of the world.”
Tags: Asia, Bonds, Corporate, Debt, Demand, Europe, Fitch, Investors, Negative yield, Plunge, Sovereign, U.S., Yields
Institutional Investor (May 6)
Unconventional monetary policy, demographic change, economic challenge and technological disruption are impacting debt markets. “Remarkably, the pool of positively yielding debt in the global fixed-income universe has shrunk by more than $5 trillion in less than two years, which clearly presents a tremendous challenge for investors seeking income and attempting to match assets to liabilities.”
Tags: ALM, Challenge, Debt markets, Demographic change, Economic challenge, Fixed income, Monetary policy, Technological disruption, Unconventional, Yields
Bloomberg (April 26)
“With the BoJ dabbling in negative interest rates, JGB yields have gotten compressed to a maximum of 0.4 percent, and that’s at a maturity of 40 years. It’s as though Japanese financial institutions are sitting on a tightly wound spring. Even a small increase in the yield — a little uncoiling — could send the whole edifice flying, a risk Janus Capital’s Bill Gross cites as an example of ‘global monetary lunacy.’”
Tags: Bill Gross, BOJ, Financial institutions, Japan, JGB, Lunacy, Maturity, Monetary, Negative interest rates, Yields
Institutional Investor (June 28)
“Yields are negative in multiple European markets,” for both sovereigns and corporate bonds. “The zero bound has therefore been broken, proving that it is just that—a mere boundary, as opposed to an impenetrable threshold.” Given the demand for liability matching and quality assets, there’s no certainty that yields can’t fall further into negative territory. “All of this serves to highlight the strangeness of the world we now live in. Daily usage of words like ‘unprecedented’ and ‘exceptional’ renders them almost meaningless. In this case, however, they ring true. Corporate bond yields turning negative truly is unprecedented.”
Los Angeles Times (June 25)
“Billions of dollars of property damage along the Eastern Seaboard. Sharply reduced yields of corn, wheat and soy at Midwestern farms. Rising sea levels threatening military installations in Southern California.” A bipartisan report entitled Risky Business quantifies these and other climate change risks in an attempt “to push what has been a highly politicized issue into corporate boardrooms for serious consideration.” Former Treasury Secretary Hank Paulson and former New York Mayor Michael Bloomberg were just two of the prominent leaders backing the report.
Tags: Bipartisan, Bloomberg, Climate change, Corn, Hank Paulson, Property damage, Risks, Risky Business, Sea levels, Soy, U.S., Wheat, Yields
The Economist (February 23)
“With short-term interest rates still stuck near zero and their balance-sheets stuffed with government bonds, the central banks of America, Britain and Japan are experimenting with a shift in approach: coupling monetary action with commitments designed to alter the public’s expectations of interest rates, inflation and the economy…. A more doveish stance would entail tolerating higher inflation, at least temporarily, in pursuit of higher output.” But there is “a question-mark over what this wave of central-bank experimentation can achieve: since bond yields are already so low, the marginal return to coaxing them even lower may be scant. For now, though, buoyant stockmarkets are giving the activists the thumbs-up.”
Tags: Bonds, Central banks, Inflation, Interest rates, Japan, Output, Stockmarkets, U.S., UK, Yields
Institutional Investor (June 18)
“The relief rally that followed Sunday’s rather limited victory for euro zone unity in the Greek general election has proved unusually faint-hearted and short-lived, with the euro down sharply against the dollar despite initially climbing to a one-month high.” As if to emphasize that Greece is but one problem confronting Europe, yields on ten-year Spanish bonds rose “to a euro-era record above 7 percent.”
Financial Times (May 30)
“US benchmark borrowing costs plunged to levels last seen in 1946 and those for Germany and the UK hit all-time lows as investors took fright at what they see as a disjointed policy response to the debt crisis in Spain and Italy.” Ten year yields fell to 1.62% on U.S. Treasuries and to 1.64% on UK gilts, the lowest since the start of recordkeeping in 1703. Meanwhile, yields on two-year German bunds hit zero, another first.
