Yields Drop to Record as China Boosts Bonds Around World
It is certainly no exaggeration
to claim China is an exporting nation
but now, it seems, they export deflation.
Instead of interest rates going up, the gist
is that they are going further down
causing many an economist
to greatly fret and frown.
In Germany they pay you a negative quarter percent
for them to keep your money
which, as a deal is far from Heaven sent
or even strangely funny.
And even our US dollar
has gotten more expensive
and you don't have to be a scholar
to know its backing ain't that extensive.
So while I don't know what all this entails
and am more than hazy on the details
something seems rather fishy
as well , I expect,not too dishy
about this economic dinner--
or just who's loser and who's the winner.
HZL
8/12/15
www.breitbart.com/.../china -is-exporting -deflation -to-europe/
Jan 11, 2015 - As the factory to the world, China has been exporting deflation . The economic impact has been increasing the real burden of debt, driving down ...
German Yields Drop to Record as China Boosts Bonds Around World
August 12, 2015 — 2:41 AM EDT Updated on August 12, 2015 — 4:30 AM EDT
Government bonds surged in developed nations around the world, pushing the yield on German two-year notes to a record low, as China’s devaluation of the yuan for a second day added to concern that the world’s second-largest economy is faltering and will curb global growth.
Debt across the euro region climbed with U.S. Treasuries and U.K. sovereign securities as the People’s Bank of China
set its reference rate 1.6 percent lower against the dollar, following an unexpected decision on Tuesday to devalue the yuan and shift to a more market-determined rate. Japanese 10-year bond yields dropped to the lowest level in three months, while Australia’s fell the most in a month. Demand for fixed-income assets will be gauged at auctions of 10-year German and U.S. debt on Wednesday.
The dimmed outlook for the global economy has encouraged investors to reduce bets on higher interest rates from central banks. Odds the Federal Reserve will raise borrowing costs next month dropped to 38 percent, while the Bank of England won’t move until August next year, options pricing indicates.
“Markets have turned 180 degrees,” said Daniel Lenz, lead market strategist at DZ Bank AG in Frankfurt. “At the beginning of the week the Fed and rate hike expectations caused yields to rise, now concerns about China are triggering the opposite. Demand at the 10-year bund auction could now be higher than previously thought.”
Negative Yield
Germany’s two-year yield dropped one basis point, or 0.01 percentage point, to minus 0.28 percent as of 9:29 a.m. London time, after touching minus 0.29 percent, the lowest since Bloomberg began collecting the data in 1990. The price of the zero percent note maturing in June 2017 was at 100.525 percent of face value.
A negative yield means investors buying the securities now will get back less than they paid when the debt matures.
Germany’s 10-year bund yield dropped three basis points to 0.60 percent as the nation prepared to sell 4 billion euros ($4.5 billion) of the euro area’s benchmark sovereign securities on Wednesday. The bonds were sold with an average yield of 0.88 percent at a previous auction on July 15.
Spanish 10-year bond yields dropped two basis points to 1.91 percent, while similar-maturity Treasury note yields tumbled seven basis points to 2.07 percent and U.K. gilt yields fell four basis points to 1.77 percent.
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