Negative yielding debt is the most striking consequence of aggressive central bank policy. The amount of bonds with negative market interest rates is near $7tn and appears set to grow. Buying a bond with a negative yield, and holding it to maturity is a guaranteed way to lose money. So why would anyone do so?
Because central banks will keep buying
Central banks have sought to stimulate economies through bond purchases. They hope to encourage lending by cutting borrowing costs, with the ultimate aim of boosting economic growth. Negative bond yields are a feature of this policy, not a bug.
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