Going sub zero with interest rates: Weird is now normal for monetary policy

Would you pay someone to borrow money from you? Rest easy, I’m not hinting at the prospect of a mafia don on the other side of the transaction. Rather, would you pay your central bank 100 bucks today in return for 99 bucks a year from now?

Those of you who think I’m laying out a scam, ease up and don’t get your panties in a bunch. Sample these news stories instead.

“German consumer goods group Henkel sold € 500m of two-year debt with a yield to maturity of minus 0.05 per cent while French pharmaceutical business Sanofi sold € 1bn of three and a half year debt, also at a yield of minus 0.05 per cent”

“Roughly €706 billion of Eurozone investment-grade corporate bonds traded at negative yields as of September 5th or over 30% of the entire market, according to trading platform Tradeweb, up from roughly 5% of the market in early January”

“Around $13 trillion worth of bonds traded with a negative yield in late August, according to J.P. Morgan Asset Management. At the beginning of 2014, the figure was close to zero” Continue reading