Why buy bonds at -0.01%?
December 11, 2020 Leave a comment
Do you remember during the European debt crisis, which peaked around 2012, when the PIGS (Portugal, Italy, Greece & Spain) were being bailed out by the European Central Bank?
In the chart below, you can see the Portuguese 10 year Government Bond was yielding 14% at that time.
I didn’t have the inclination, acumen or guts to buy those bonds then and nor since.
But today, that bond has traded at a negative yield of 0.01%.
How times have changed.
Some investors have felt that such a yield is so ravishing that they decided to buy the heck out of those bonds to the point where they will happily receive a zero yielding return.
I can’t figure this out and nor do I have answer.
It’s simply an astonishing occurrence.
December 9, 2020
by Rob Zdravevski
rob@karriasset.com.au
