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

mbig

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You think our Rates are Low?
With a new EU QE coming, rates have been low and now are ridiculous.
Even dubious Italian and Spanish 10 year paper yield LESS than the same USA debt.
Other, shorter term issues, have sold at negative yields, but never anything like 5 year ones.

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

Move Reflects Plummeting Borrowing Costs Across Europe
By EMESE BARTHA And BEN EDWARDS
Updated Feb. 25, 2015 9:20 a.m. ET
http://www.wsj.com/articles/germany...ive-yield-for-first-time-on-record-1424871074

Germany on Wednesday sold five-year government debt at a negative yield for the first time on record, reflecting plunging borrowing costs across the region in the run-up to the European Central Bank’s sovereign-bond-buying program.

The German Finance Agency sold €3.281 billion ($3.72 billion) of bonds maturing in April 2020 at an average yield of Minus 0.08%. At a similar deal in January, the yield was 0.05%.

The Negative yield means investors are effectively paying the German state for holding its debt. Even so, bond prices—which climb when yields drop—are expected to rise further once the ECB starts its latest round of stimulus measures next month, meaning investors could potentially sell the bonds at a profit.

“The negative yield is not scaring investors away,” said Jens Peter Sorensen, chief analyst at Danske Bank .
Given that eurozone interest rates are likely to remain low for some time...

Here were Rates on Major economy 10 Year Treasuries as of Last Night. Also WSJ.

U.S. 10 Year _ _ _ _ _ 1.991
German 10 Year _ _ _ 0.333
Japan 10 Year _ _ _ _ 0.348

U.K. _ _ _. _ _ _ _ _ _ _ 1.72
Italy _ _ _ _ _ _ _ _ _ _ 1.45
Spain _ _ __ _ _ _ _ _ _ 1.38

So guess whose Bonds the Chinese and other Large Sovereigns and Private Pensions just about Have to Buy?
Only the USA has the size and yield.
 
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Yep, we got them Chinese right where we want em...
 
Yep, we got them Chinese right where we want em...
I did NOT say nor imply we "have the Chinese just where we want them."
They're buying everything with 'Our' money, including Real Estate Nationwide, especially Trophy Properties, including recently: the Waldorf Astoria ($2 Billion) and $50,000,000 condos and Mansions.
 
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I did NOT say nor imply we "have the Chinese just where we want them."
They're buying everything with 'Our' money, including Real Estate Nationwide, especially Trophy Properties, including recently the Waldorf Astoria ($2 Billion) and $50,000,000 condos and Mansions.

It's good for the economy their spending that money. Only another couple of trillions and we're there.
 
You think our Rates are Low?
With a new EU QE coming, rates have been low and now are ridiculous.
Even dubious Italian and Spanish 10 year paper yield LESS than the same USA debt.
Other, shorter term issues, have sold at negative yields, but never anything like 5 year ones.

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

Move Reflects Plummeting Borrowing Costs Across Europe
By EMESE BARTHA And BEN EDWARDS
Updated Feb. 25, 2015 9:20 a.m. ET
Germany Sells Five-Year Debt at Negative Yield for First Time on Record - WSJ



Here were Rates on Major economy 10 Year Treasuries as of Last Night. Also WSJ.

U.S. 10 Year _ _ _ _ _ 1.991
German 10 Year _ _ _ 0.333
Japan 10 Year _ _ _ _ 0.348

U.K. _ _ _. _ _ _ _ _ _ _ 1.72
Italy _ _ _ _ _ _ _ _ _ _ 1.45
Spain _ _ __ _ _ _ _ _ _ 1.38

So guess whose Bonds the Chinese and other Large Sovereigns and Private Pensions just about Have to Buy?
Only the USA has the size and yield.

Negative interest rates are interesting., aren't they? But even low rates are not the sign that all is well.
 
I did NOT say nor imply we "have the Chinese just where we want them."
They're buying everything with 'Our' money, including Real Estate Nationwide, especially Trophy Properties, including recently: the Waldorf Astoria ($2 Billion) and $50,000,000 condos and Mansions.

Didn't mean to suggest that you meant that, I was cracking a joke.
 
Negative interest rates are interesting., aren't they? But even low rates are not the sign that all is well.

All is not well in Europe. Their economies are suffering from the bank installed austerity and the continued absence of the "Confidence Fairy" that was to be their savior. They are only now getting around to QE when their economies are dangerously close to deflation from previous tight money policies. Thankfully we did not fall into that trap here. Thank you Obama.
 
All is not well in Europe. Their economies are suffering from the bank installed austerity and the continued absence of the "Confidence Fairy" that was to be their savior. They are only now getting around to QE when their economies are dangerously close to deflation from previous tight money policies. Thankfully we did not fall into that trap here. Thank you Obama.

Thank Hank Paulson for that. After all, credit should be given thise to whom it is due.
 
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.
 
You think our Rates are Low?
With a new EU QE coming, rates have been low and now are ridiculous.
Even dubious Italian and Spanish 10 year paper yield LESS than the same USA debt.
Other, shorter term issues, have sold at negative yields, but never anything like 5 year ones.

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

Move Reflects Plummeting Borrowing Costs Across Europe
By EMESE BARTHA And BEN EDWARDS
Updated Feb. 25, 2015 9:20 a.m. ET
Germany Sells Five-Year Debt at Negative Yield for First Time on Record - WSJ



Here were Rates on Major economy 10 Year Treasuries as of Last Night. Also WSJ.

U.S. 10 Year _ _ _ _ _ 1.991
German 10 Year _ _ _ 0.333
Japan 10 Year _ _ _ _ 0.348

U.K. _ _ _. _ _ _ _ _ _ _ 1.72
Italy _ _ _ _ _ _ _ _ _ _ 1.45
Spain _ _ __ _ _ _ _ _ _ 1.38

So guess whose Bonds the Chinese and other Large Sovereigns and Private Pensions just about Have to Buy?
Only the USA has the size and yield.

When a country does know how to deal with industry and economy, the rates get low. Germany has zero need for them.

Simple as that.

Insteat of financial industry, the better alternative is real production, insteat of Wall Street and London bubbles, better Dretroit (Ford) Computers, Mercedes, BMW and and and...financial indutry is....TRASH and sort of criminal legalized.
 
so, putting money in one's mattress yields a better rate than those bonds
it's official. i have now seen it all
 
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-
 
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.
 
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.
 
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
 
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.
 
All is not well in Europe. Their economies are suffering from the bank installed austerity and the continued absence of the "Confidence Fairy" that was to be their savior. They are only now getting around to QE when their economies are dangerously close to deflation from previous tight money policies. Thankfully we did not fall into that trap here. Thank you Obama.


Nonsense.

Their economies are suffering from the consequences of leftist corruption and policies that allowed them to spend beyond their means for years.

" Austerity "....Lol ! Gotta love the brain dead liberal platitudes.
 
Thank Hank Paulson for that. After all, credit should be given thise to whom it is due.


No you can thank Progressive policies that date back to the early 90s and two EXTREMELY corrupt and Democrat run and protected GSEs for that.

Give credit where credit is due.
 
Nonsense.
Their economies are suffering from the consequences of leftist corruption and policies that allowed them to spend beyond their means for years.

" Austerity "....Lol ! Gotta love the brain dead liberal platitudes.
Basically true.
You have a Vast Social support Network In Europe, incl Healthcare of course.

But all these economies depend on Growth to Fund these aging Euro-boomers.
But Europe's [NATIVE] Fertility rate is WAY below replacement.
Immigrants have been let in as the new workers, but Instead they end up being a big drag on those Social funds. (!)

Frankly, I think all but Germany and few other Northern EU states are Screwed. (incl France)
Japan, with no immigrants, has a population shrinking into Oblivion and printing Yen to pay for same Busted system. (selling more senior diapers than baby diapers)
USA is considerably better demographically.

:Correction on my Math above:
Buyers of the German bonds above would lose $8 per $1000 per Year. IOW Lose $40 over the 5 years..
Have $960 per $1000 'invested' in 2020.
 
Nonsense.

Their economies are suffering from the consequences of leftist corruption and policies that allowed them to spend beyond their means for years.

" Austerity "....Lol ! Gotta love the brain dead liberal platitudes.

LOL Like Europe was not doing well before the financial meltdown? Gotta love the flight from reality and historic denial-ism from the radical right. The reality is that Europe cut spending and their banks kept interest rates artificially high for too long and they are paying the price with a double dip. Your just jealous because you and the GOP wanted the same thing for the US and failed. Instead we got the fastest growing economy in the free world and you are livid.
 
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