Pennsylvania Trust

The Real Value of Negative Yielding Bonds

The Real Value of Negative Yielding Bonds

The below chart should help explain why the U.S. Treasury (and to an extent China and Korea) remain a popular place to park cash… There is no alternative (TINA).

When adjusted for inflation, the $13 trillion of negative yielding investment grade bonds becomes more than $25 trillion.

If, as expected, the Federal Reserve cuts rates at least twice this year, the value will likely top $30 trillion, meaning roughly half the world’s debt would yield less than inflation.

Disclosure: This Commentary represents a review of topics of possible interest to Pennsylvania Trust’s clients and is not personalized investment advice. It contains Pennsylvania Trust’s opinions, which may change following the date of publication. Information obtained from third-party sources is assumed to be reliable but is not guaranteed. No outcome – including performance – is guaranteed, due to various uncertainties and risks. This document is not a recommendation of any particular investment. Investment decisions for clients are made on an individualized basis and may be different from what is expressed here. Past performance is no guarantee of future results.