End of a (Negative) Era: Negative Yields Reach Positive Territory Globally

Fixed Income Chart of the Month: January 2023

For the first time since 2014, the amount of outstanding bonds with negative yields reached zero. This reversal characterizes the magnitude and speed of global interest rate changes over the last 12 months. The Eurozone’s sharp increase in interest rates drove the bulk of the decrease through 2022, yet the question remained if Japanese bonds would ever leave negative territory under the country’s massive quantitative easing (QE) program. It appears there may be hints of a regime change, or at least a reduction in QE, which recently pushed the last of the global negative yields into positive territory. End of an (Negative) Era. Good Riddance.

Investors now have an opportunity to access higher yields globally.

Bloomberg Global Aggregate Negative Yielding Debt Index

 

Source: Bloomberg. As of January 4, 2023.

  • For the first time since 2014, the amount of outstanding bonds with negative yields reached zero.
  • The total market value for negative-yielding debt peaked at $18 trillion in December 2020.
  • In recent years, European and Japanese bonds made up the majority of negative-yielding bonds.
  • Rising yields around the world have created competition for U.S. Treasuries.
  • With the end of the negative-yielding era, investors now have an opportunity to access higher yields around the globe.

Learn more about SBH’s Fixed Income Strategies.


 

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