This universe just keep expanding as major central banks around the world, either go further negative in their key refinancing interest rates or expand their asset purchase program. Biggest rise came after Bank of Japan (BOJ) announced that will charge -0.1% on excess deposits, earlier this year. Since then, this negative yielding universe expanded from little more than $6.5 trillion to $10.4 trillion as of now.
This latest figure came from rating agency Fitch this week, which says the size expanded by 5% from $9.9 trillion, it calculated as of late April.
According to the agency,
“Unconventional monetary policies, regulatory risk mitigation by banks and a flight to safety in global financial markets have all contributed to the ongoing rise in the amount of sovereign debt trading with a negative yield”
Latest rise came from short dated bonds dive into negative territory and long dated from Japan. Japan is the biggest source of negative yielding bonds.
As this universe expands and since it’s not just confined to sovereign space, investors are exposing themselves to greater risks that they are getting compensated for.
