Jul 1, 2019

The world now has $13 trillion of negative yielding bonds

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Bloomberg, Institute of International Finance; Chart: Andrew Witherspoon/Axios

The amount of bonds with negative yields has grown to more than $13 trillion, data from the Institute of International Finance shows, and unlike in 2016 the amount of debt below zero looks poised to grow.

What's happening: Since European Central Bank President Mario Draghi's latest news conference signaling the central bank is poised to further ease its already negative interest rate policy, bond yields have been dropping below zero across Europe.

Investors are trying to find other places to stash their cash. Interest in so-called alternative assets is pushing banks to launch brand new hundred-billion-dollar divisions, and institutional holdings of money market funds have surged in recent weeks to a record high of $1.68 trillion, IIF notes.

  • But money is still piling into the bonds that charge instead of pay bondholders interest.

The intrigue: Negative yields are primarily on government bonds from Japan and various European countries, but the stock of corporate bonds and securitized instruments with negative yields also has increased, topping $500 billion and $1 trillion, respectively, according to IIF's data.

Go deeper: Municipal bonds are 2019's hottest asset

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