Wednesday, August 10, 2016

U.S. Treasury Yields Go Negative 
John Rubino* explains how the the positive yield of U.S. Treasury bonds are actually not in fact positive, when the cost of hedging currency fluctuations is included .. What does this mean? Several things, all of them bad for pension funds and insurance companies – and maybe the U.S. government .. Now that U.S. Treasuries yield no more in Japan and Europe than local government bonds, conservative institutions will have to either find a way to live with zero returns on their fixed income portfolios (which for most of them is not possible) or go further out on the risk spectrum by buying corporate rather than government bonds. This is already happening, leading corporations to offer the more-hungry-than-usual markets a tsunami of new bond issues." .. Rubino sees a financial crisis as a result, starting with insurance companies, pension funds & banks which then "roars through over-leveraged corporations and their national governments."
LINK HERE to the article

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