Earlier today we discovered that while the total stock of negative yielding debt may be falling thanks to the reflation narrative and the blowout in OAT yields that’s accompanied rising French political risk, the potential still exists for ECB purchases to create hilarious market distortions.
So while we’re by no means out of the woods yet when it comes to QE-induced hilarity, we may have turned a corner on negative yielding debt. Have a look and decide for yourself.
Via BofAML
While there are still plenty of [negative yielding] bonds strewn across the global market, we think that this narrative is becoming somewhat old. September 2016 marked “peak negative yields” at just over $13tr globally. Since then, the numbers have fallen to below $8tr. Japan — and understandably France — have been important contributors to this decline. But more generally, the reflation trade is putting an end to this unique collection of bonds, as chart 2 highlights.
