Both high yield indices demonstrated a positive correlation with rate changes, meaning that high yield bonds had positive returns when
government bond yields rose.
This rising demand for investment income has been complicated by the persistence of historically
low government bond yields since the financial crisis in 2008.
Sterling fell 1 % against the dollar following the announcement, while British
government bond yields hit record lows and the main share index rose by 1 %.
Posted fixed mortgage rates have always been
above government bond yields so paying off your house will offer a higher return over the long - term.
In fact, with the recent fall in long -
term government bond yields, annuities now return more than 100 % return of premiums paid in many cases.
The yen was also at four - week high against the greenback and the overnight drop in
U.S. government bond yields saw German Bund yields move decisively back into negative territory.
Charlie Bilello, Director of Research at Pension Partners, posted the following table via Twitter on June 16th that references the current state of
government bond yields around the world.
In addition to the aforementioned concerns, Golub noted fears about whether economic growth won't meet lofty expectations and signals being sent from the bond market, where a narrower gap
between government bond yields is kindling fears that a recession is looming.
Euro
zone government bond yields jumped on Thursday, kicking recent sharp falls into reverse, and the euro climbed to a six - day high.
A decades - long trend of falling interest rates and falling inflation — and inflation expectations — seemed to have ended, as the 10 - year U.S.
government bond yield broke the downward trend since 1987,» says chief strategist at Sparinvest David Bakkegaard Karsbøl in his monthly comment for February.
When the cost of living has eaten away
at government bond yields, investors have tended to seek more attractive stores of value, including gold.
Our measure of the gap between expected returns on global equities and
real government bond yields — a proxy for the equity risk premium — has fallen from recent peaks, yet still sits well above its long - term average.
Moreover, the decade - long low level and volatility of
government bond yields led financial institution to take massive notional amounts of interest rate risk.
The yield on the German 10 - year Bund recently fell below zero, and the Swiss 30 - year
government bond yield turned negative, in effect charging investors for the privilege of holding their cash.
The positive correlation of high yield bonds was further corroborated by the negative correlation of credit spreads and interest rate changes, indicating that
when government bond yields moved higher, credit spreads tightened.
Given the global backdrop of an aging demographic, high debt levels, and some major trading partners that have 10 - year
government bond yields below 1 % and sub-target inflation, the equilibrium level for the U.S. 10 - year government bonds seems more likely to reside below, rather than above, 3 % — in which case this cycle might end like many others with an inverted yield curve — who knows?
He has implemented a massive stimulus policy by cutting the central bank's benchmark interest rate to negative, keeping the 10 - year Japanese
government bond yield near 0 percent in an effort to control the yield curve and stepping up the Bank of Japan's asset purchases.
Government bond yields also turned higher, with the benchmark 10 - year note most recently trading near 2.88 percent, a gain of about 3.8 basis points.
Meanwhile government bond yields, a reliable barometer of market fear, are falling to record low levels as investors engage in a panicked hunt for risk - free assets.
U.S. stocks plunged on Tuesday, with the Dow Jones Industrial Average sinking more than 400 points as rising
government bond yields drove investors into risk - off mode...
Yields on high - yield corporate bonds narrowed (centre panel) and record low
government bond yields pushed up valuations of risky assets (right - hand panel).
From the end of October onwards, monetary policy was eased further in China, Europe and Japan, boosting US equity markets to new all - time highs (Graph 1, left - hand panel) and pushing long -
run government bond yields to record lows in many euro area economies.