Germany and Japan
Two countries with over $9T of global GDP, it’s hard to believe both are sitting with bond yields below zero. Today, the German 10 year yield crossed Japan’s at a whopping -0.09%.
Investors globally are starting to worry about a taper tantrum in Japan.
In May 2013, after a soft suggestion of a pull back in government bond purchases by then-Fed Chairman Ben Bernanke, panic spread in the market, leading the 10-year Treasury yield surged 140 basis points (1.40%) in just four months. This week, as Japan launched a colossal $274B fiscal stimulus plan, many worry that their asset purchase (government bond buying) gravy train has come to an end.
As we’ve stressed to subscribers, a surge in bond yields back to 2011 levels would equate to nearly $4T in bond losses to investors world wide.
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