Negative Bound: Danish, German Government Bond Yields Are Negative!

source: DoubleLine.com
According to Bloomberg.com (GDBR2:IND), investors are paying the German government -.034% to hold on to its 2-year debt! This means that German bunds are still considered a safe haven to protect against the euro zone sovereign debt and banking crisis. However, the German bund rally could end soon if Germany decides to sacrifice its credit quality to save the euro zone (or there's inflation risk). But, we'll see if a huge "euro quake" shakes the earth first. Below are links to more German bund yields to watch and snapshots of the negative 2-year German bund yield. They already went negative in the beginning of June (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).

I listened to Jeff Gundlach's conference call at DoubleLine Capital's website today and he showed a chart of Danish 1-year government bond yields at -0.32%. Read the full DoubleLine presentation at Business Insider.


2yr German Bund Yield intraday (Bloomberg.com)

France is also joining the negative-boundathon:

"France, which as recently as November had seen its yields rise, has become the next cab in the queue for investors looking for safety. It joined Germany and the Netherlands this week in selling shorter-dated securities at negative yields, the first time that has happened in the country. Germany crossed that threshold earlier this year.

On Monday, France sold just under €2 billion ($2.45 billion) of six-month T-bills at an average yield of minus-0.006%, down from a positive 0.096% last week." (WSJ, July 11)

We are living in a crazy negative bound world right now. Here are updates on what's going on in Greece and Spain.

"In debt-ridden Greece, government after government has tried to cut its way out of a brutal recession and balance its budget in the process. But the austerity experiment has been an unmitigated disaster; the country is now a symbol of economic insanity." (A Greek tragedy / Al Jazeera)

"No respite seen in Spanish housing crisis: As protesters in Madrid clash with police over new budget cuts, the housing crisis that plunged Spain into economic catastrophe shows no sign of abating. Especially here in Ciudad Valdeluz." (GlobalPost)

Source: Bloomberg.com
Source: Bloomberg.com

Quotes at Bloomberg.com:

1-Year German Bund Yield
2-Year German Bund Yield
5-Year German Bund Yield
8-Year German Bund Yield
10-Year German Bund Yield

I see on my real-time widget that $BUNL, the PowerShares DB German Bund Futures ETN, is up 0.33% today at $24.08. The unsecured ETN is tied to the DB USD Bund Futures Index that measures "the performance of a long position in Euro-Bund Futures." More specifically, "the underlying assets of Euro-Bund Futures are Federal Republic of Germany-government issued debt securities ("Bunds") with a remaining term to maturity of not less than 8 years and 6 months and not more than 10 years and 6 months as of the futures contract delivery date." (PowerShares). It is the only real-time exchange traded German bund exposure I can put on my widget.

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