Posts tagged 'Negative Yields'

This is nuts. Get used to it

This will be a mostly charted recap of where exactly in the rabbit hole of negative yielding corp bonds we are following last week’s knee-shaking sale of some brand new negative yielders by non-state owned Henkel and Sanofi.

It was a first. It was exciting. Read more

Is this nuts? Swiss 50yr is negative [updated]

Nothing to see here:

As of a few days ago (updated to note it went negative for the first time on Friday) the entire stock of Swiss bond yields went negative.

And below the break is the yield curve for future generations to look at and wonder how did it all get so nuts?/ why we ever thought this stuff was weird? Read more

A physical vs forward commodity market disconnect

A strange thing is happening in commodity markets.

As we already commented on Twitter, what the physical supply and demand situation is telling us is getting increasingly disconnected from what the forward and futures markets are saying.

The curve, in short, is feeling mispriced. Read more

Human sacrifice, the original negative interest rate

The abstract from the latest paper by Peter T. Leeson entitled “Human Sacrifice” (H/T Tyler Cowen at Marginal Revolution): Read more

QEternity, the FDIC guarantee, liquidity and a pumpkin

Okay, who’d forgotten that FDIC deposit insurance for non-interest-bearing transaction accounts expires at the end of December?

We confess, it did slip our minds — momentarily. Read more

Some positive Schatz

Reuters: 19-Sep-2012 10:41 – GERMANY SELLS 4.084 BLN EUROS IN TOP-UP OF 2-YEAR SCHATZ AV YIELD 0.06 PCT

That’s Germany selling 2yr paper at a POSITIVE yield for the first time since June, having got rid at zero-yield in August. Investors also bid 2.1 times the amount allotted, the most since January. Read more

There is a disturbance in the UK funding curve

FT Alphaville has already referred to the weird phenomenon of unsecured funds trading through secured funds in the UK this week, as reported by ICAP.

By definition, secured borrowing should be cheaper than than unsecured. Read more

UBS tackles the negative yield puzzle

Low yields in the context of epic supply may baffle some people, but not UBS’s Chris Lupoli.

Lupoli, part of Global Macro Team, seems, if anything, to subscribe to our negative carry shift theory — the idea that a more permanent curve transformation may be under way. Read more

Redefining labour

This is the third installment in FT Alphaville’s “Beyond Scarcity” series, a somewhat radical look at the impact of technological progress and efficiency on the volume of goods and services being produced by the system, asking whether “abundance” could now be a key determinant of deflationary forces in the western world.

On top of this, we have considered the role played by “artificial scarcity”, whether imposed wittingly or unwittingly by industry participants as a counterweight to such deflation, and to what degree such measures could now be running into scalability issues. In short, whether there is a limit to how much artificial scarcity private organisations can impose to counteract deflationary forces of abundance, without experiencing diminishing returns. Read more

Economics, a space opera

FT Alphaville would like to survey the following statement:

Economists are failing to account for mass technological innovations when making forecasts and constructing models. Read more

German negative yields as harbinger of deflation

Mohammed El-Erian has penned a few thoughts about Germany’s negative yielding bubill auction and indentifies — quite rightly — that there are major risks associated with this precedent.

Ultimately, as FT Alphaville has also argued, a negative yielding regime of this sort could bring about exactly the sort of voluntary capital destruction conditions that turned the 1930s crisis into a depression. Read more

Negative yields at the house of Buba

Germany appears to have had a successful auction of six-month debt on Monday.

That said, there is a caveat. The auction for €3.9bn worth of paper achieved a bid-to-cover ratio of 1.8 versus a previous bid-to-cover of 3.8. The average yield was a negative 0.0122 per cent — a bit of an auction first. Read more

On the flightiness of uninsured deposits

There’s a heated debate going on in the blogosphere between Amar Bhidé, professor at Tufts’s Fletcher School of Law and Diplomacy, and Felix Salmon, Reuters blogger extraordinaire. Reuters’ Peter Thal Larsen has also waded in.

It pertains to Bhidé’s proposal that a 100 per cent state deposit guarantee system might be just what is needed to nip the current crisis in the bud. Read more

Tracking the ‘dollar for euro’ arbitrage

These two charts, courtesy of Icap’s Euro Repo Weekly, tell it all:

 Read more

Micro and negative yields in Germany

Who said demand for German debt was floundering?

Monday’s auction of six-month Bubills pulled in an impressive average yield of no less than 0.0005 per cent — yes, that’s to the fourth decimal point. Read more