Life At Negative Rates

With the BoJ moving to negative policy rates in January, we now have five central banks offering negative rates on reserve deposits, making up more than 20% of the global economy, notes Nomura. Mixo Das and colleagues point out in their July 29 research piece titled “Life at negative rates” that bond yields are negative on almost $12 trillion of government debt, representing over a quarter of the total outstanding debt.

Negative rates don’t imply higher valuations

The Nomura analysts note that during and after the Global Financial Crisis in 2008, several monetary authorities adopted extremely loose policy settings. They point out that the latest in the line of unconventional approaches is the negative interest rates some central banks are offering on...