After peaking around $14 trillion last September, the negative bond universe that comprises of bonds which are trading at negative yields shrank to $9.8 trillion in the third week of February. The election of the Republican candidate Donald Trump boosted expectations that fiscal policies would be expanded, which in turn would trigger higher inflation. In addition to that, a pickup in the inflation worldwide also contributed to the slide.

However, the above trend seems to be unraveling as over the course of past few weeks, the universe expanded to $10.5 trillion according to the data from Trade web, a bond trading platform. The majority of the universe comprise of European and Japanese debt. These are the two countries where the central banks are still pursuing ultra-easy monetary policy and the benchmark interest rates set by the central banks are in the negative. The negative yielding bonds in Japan account for $5.783 trillion and that is excluding the negative-yielding Japanese corporate debt.

In Europe, the majority of the negative yielding bonds are from four countries. The biggest contributor is Germany with $876 billion trading in the negative, followed by France ($799 billion), UK ($399 billion), and Italy ($352 billion). The recent political uncertainties across Europe and North America have pushed investors back to the safety net of the government bonds.