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Thread: Germany Sells Five-Year Debt at Negative Yield for First Time on Record

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    Re: Germany Sells Five-Year Debt at Negative Yield for First Time on Record

    so, putting money in one's mattress yields a better rate than those bonds
    it's official. i have now seen it all
    we are negotiating about dividing a pizza and in the meantime israel is eating it
    It's a shame the White House has become an adult day care center. Someone obviously missed their shift this morning. ~ Sen. Corker

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    Re: Germany Sells Five-Year Debt at Negative Yield for First Time on Record

    Quote Originally Posted by OrphanSlug View Post
    This is what happens when the EU talks about Quantitative Easing, spread across the EU nations who are at different points in fiscal and debt condition. There is pressure on bonds (not just in Germany) given this prospect of the European Central Bank engaging in a €60 B per month bond buying program. The result is a negative yield for these German Bonds due to deflation. Germany, just before this ECB program is to get going, issued €3.28 B five year notes at minus 0.08 percent. The yield on this term German notes has been in decline ever since Q1 2013. But what this did was beat out Finland, who last month did a minus 0.02 percent yield under similar conditions. The difference is Germany has a bigger bond market with a more global grouping of buyers. Because of these movements and what happened with these German bonds, is it assumed that eventually (if not already) that Finnish, Dutch, Austrian and German should all end up with negative bond yields (which means the bond price is up.) Match that to other EU nations where this is not happening the same way and you should be able to see the concern.

    Things are about to get more interesting as we talk about which nation within the EU continually has to shift debt around, or outright ask for debt forgiveness
    Have you heard Greece wants to talk about exactly that.. Germany isn't having any of that though.


    Tim-
    “When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.” - P. J. O’Rourke
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    Re: Germany Sells Five-Year Debt at Negative Yield for First Time on Record

    Quote Originally Posted by joG View Post
    Negative interest rates are interesting., aren't they? But even low rates are not the sign that all is well.
    Yes.
    So if you buy $1,000,000 worth of Bonds, you have to GIVE them an additional $1600 a year for 5 years, and in 2020, you will be guaranteed to have $992,000.

    Not most people's idea of 'investment', tho short term rates have been virtually zero in many countries for quite a while.
    I'm personally sick of not being able to dunk a basketball because of racism.
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    Re: Germany Sells Five-Year Debt at Negative Yield for First Time on Record

    Quote Originally Posted by mbig View Post
    Yes.
    So if you buy $1,000,000 worth of Bonds, you have to GIVE them an additional $1600 a year for 5 years, and in 2020, you will be guaranteed to have $992,000.

    Not most people's idea of 'investment', tho short term rates have been virtually zero in many countries for quite a while.
    The idea is that you get back something instead of nothing or risk having the cash in house.

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    Re: Germany Sells Five-Year Debt at Negative Yield for First Time on Record

    Quote Originally Posted by joG View Post
    The idea is that you get back something instead of nothing or risk having the cash in house.
    why not in a bank savings account, instead
    we are negotiating about dividing a pizza and in the meantime israel is eating it
    It's a shame the White House has become an adult day care center. Someone obviously missed their shift this morning. ~ Sen. Corker

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    Re: Germany Sells Five-Year Debt at Negative Yield for First Time on Record

    Quote Originally Posted by justabubba View Post
    why not in a bank savings account, instead
    That is fine, if the bank is safe.

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    Re: Germany Sells Five-Year Debt at Negative Yield for First Time on Record

    Quote Originally Posted by Hicup View Post
    Have you heard Greece wants to talk about exactly that.. Germany isn't having any of that though.


    Tim-
    That is part of what I am going on about. Greece, and France for that matter, have a different debt position than Greece, Finland, Austria, etc. In this case the ECB is going to have a tough time managing the debt price and yields across these nations when it comes to the pending QE program they are talking about. But it speaks directly to the concerns I have had, now shared by the ECB, talking about the debt of one EU nation being a consequence to tax payers in another EU nation.
    "Every time something really bad happens, people cry out for safety, and the government answers by taking rights away from good people." - Penn Jillette.

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    Re: Germany Sells Five-Year Debt at Negative Yield for First Time on Record

    Quote Originally Posted by joG View Post
    That is fine, if the bank is safe.
    in the US it is guaranteed, per institution
    we are negotiating about dividing a pizza and in the meantime israel is eating it
    It's a shame the White House has become an adult day care center. Someone obviously missed their shift this morning. ~ Sen. Corker

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    Re: Germany Sells Five-Year Debt at Negative Yield for First Time on Record

    Quote Originally Posted by justabubba View Post
    in the US it is guaranteed, per institution
    It depends on the size of the loss and account, i thought.

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    Re: Germany Sells Five-Year Debt at Negative Yield for First Time on Record

    Quote Originally Posted by joG View Post
    It depends on the size of the loss and account, i thought.
    The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
    https://www.fdic.gov/deposit/deposits/
    we are negotiating about dividing a pizza and in the meantime israel is eating it
    It's a shame the White House has become an adult day care center. Someone obviously missed their shift this morning. ~ Sen. Corker

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