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Negative-Yielding Debt: Monetary Contagion Spreads

Published Tue, 25 Jun 2019 00:35:07 -0400 on Seeking Alpha

Negative-yielding government debt (the case where investors pay the sovereign lenders for the privilege of lending them funds) has hit an all-time record (based on the Bloomberg database) last week at $13 trillion.


Chart Source: The World Now Has $13 Trillion of Debt With Below-Zero Yields, Bloomberg, June 20, 2019
A quarter of all investment-grade corporate debt is now also yielding negative payouts. (Note: Bond returns include capital gains, so as yields fall, capital gains rise for those investors who do not hold bonds out to maturity.)
In effect, negative yields are a form of a financialized tax: investors are paying a premium for risk management that the bonds provide, including the risk of future decreases in interest rates and the risk of declining value of cash due to expected future money supply increases. In other words, eleven years after the Global Financial Crisis, the macro-experiment of monetary policies "innovations" under the QE has been a failure: negative yields resurgence simply prices in the fact that inflationary expectations, growth expectations and financial stability expectations have all tanked, despite a gargantuan injection of funds into the financial markets and financial economies since 2008.
In 2007, total assets held by Bank of Japan, ECB and the U.S. Fed amounted to roughly $3.2 trillion. These peaked at just around $14.5 trillion in early 2018 and are currently running at $14.3 trillion as of May 2019. Counting in... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
CORNERSTONE TOTAL RETURN FUND 11.05   0.0 0.00 2.48 22.40
ZWEIG FUND 10.86   0.0 0.00 1.44 13.43
LIBERTY ALL STAR EQUITY FUND 6.17   0.0 0.00 0.65 10.62
BLDRS EUROPE 100 ADR INDEX FUND 19.92   0.0 0.00 1.07 5.37
SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST 262.56   0.0 0.00 5.67 2.18
PROSHARES ULTRAPRO SHORT S&P 500 27.77   0.0 0.00 0.00 2.13
SPDR S&P 500 ETF 292.36   0.0 0.00 5.42 1.87
PROSHARES ULTRASHORT S&P 500 30.82   0.0 0.00 0.00 1.86
POWERSHARES QQQ TRUST SERIES 1 182.07   0.0 0.00 1.49 0.79

CORNERSTONE TOTAL RETURN FUND - CRF
CORNERSTONE TOTAL RETURN FUND - CRF  


Older articles featuring Cornerstone Total Return Fund (CRF):
Pay Attention To The Message The Yield Curve Is Sending
The Dollar, High-Yield Bond Market And S&P 500 Revenue Growth
Two Yield Spreads Are Better Than One For Business Cycle Analysis
Equity CEFs: Where's The Beef In The Delaware Dividend & Income Fund?
Of Slopes And Flops: The Yield Curve Inversion
When A Yield Curve Inversion Means Recession
Ignore The Yield Curve, They Said...
Is The U.S. Yield Curve Signaling A U.S. Recession?
Short And Sharp: Yield Curve Inversion - A False Positive?
Weekly Edge: Yield Curve Sends Mixed Signals

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