Investors may have to grapple with the possibility of the once-unthinkable becom...
- Investors may have to grapple with the possibility of the once-unthinkable becoming reality - negative U.S. Treasury bond yields, according to money manager Pacific Investment Management Co .
But a deteriorating global outlook exacerbated by an escalating trade war between China and the United States, the world’s largest economies, has stoked a torrent of demand for low-risk government debt.“It is no longer absurd to think that the nominal yield on U.S. Treasury securities could go negative,” Joachim Fels, PIMCO’s global economic adviser, wrote on Wednesday in a blog post.
In the United States, if the Federal Reserve reduces domestic borrowing costs to near zero and restarts quantitative easing to avert a recession, negative yields on U.S. Treasuries “could swiftly change from theory to reality,” according to Fels. On Wednesday, U.S. 30-year bond yields fell to 2.123%, not far from their all-time low of 2.089% set in July 2016, according to Refinitiv data.
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