The Weekly Brief (15 February 2016) - J.P. Morgan Asset Management

The Weekly Brief (15 February 2016)

Contributor Global Markets Insights Strategy Team

The idea of investors willingly accepting a loss on an investment seems ludicrous; however, the current risk-off environment coupled with more easing from global central banks has pushed the yields on global government bonds to record lows.

As highlighted in this week’s chart, 26% of global government bonds yield less than 0% – essentially guaranteeing investors lose money in nominal terms if they invest now and hold the bond to maturity. Furthermore, 64% of global government bonds yield less than 1%. Will this low yield – or even no yield – environment continue? With the Bank of Japan and European Central Bank now exploring the world of negative interest rates, this could continue to put downward pressure on bond yields for the foreseeable future.

Percentage of global government bonds yielding less than 0%
BofA/Merrill Lynch Global government bond index

Source: Bloomberg, BofA/Merrill Lynch, J.P. Morgan Asset Management; data as of 9 February 2016.

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The Weekly Brief (15 February 2016)