Friday, June 1, 2012

Global Zero Bound: 2-Year German Schatz Yield Goes Negative, 10-Year Treasury Yield Hits Record Low, 10-Year JGB Yield at Nine Year Low

Yesterday, the 2-Year German Schatz yield dipped below 0% after a bad Italian bond auction, and the 10-Year Treasury Bond yield hit a record low of 1.53%. This action shows how nervous investors are about Greek exit risk, the sovereign debt and banking crisis in Spain, and contagion risk spreading throughout the euro zone and planet. We are in a zero bound world right now. The 10-year Japanese government bond yield is at 0.83%, down from 0.85% on May 22 when Fitch downgraded Japan's credit rating. They see Japan's Debt/GDP ratio at 239% by the end of 2012. Here are charts for the blog archive. It can't last forever.

2-year German Government Bond Yield (Schatz) = 0.002% (at 0.01% right now)

Source: Bloomberg.com

10-Year U.S. Treasury Yield = 1.55%

Source: Bloomberg.com


10-year Japanese Government Bond Yield = 0.816%

Source: Bloomberg.com

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