The world is in the midst of one of the strangest asset bubbles of all time. Instead of being fueled by the hope of bigger and bigger gains, it is being driven by a resignation to incurring lower and lower… and ultimately negative, yields on capital.
This summer, the global inventory of bonds yielding less than zero reached a record $13 trillion.
Negative yielding instruments are concentrated mainly in Europe and Japan, where they have spread from sovereign to corporate issuances. Now even some “junk”-rated bonds are teetering around 0%.