Why aren’t you buying 10y negative yield bonds anon?

[Anonymous No.15012212]

Just lend us your 1 k usd for 10 years and after that duration you get 990 usd back.

Seriously, who the fuck are buying these things at -0.8 % yield and why are they keep on buying them?

Inflation hedge makes no fucking sense, because if there is inflation your 990 usd you get back in 10 years is worth much much muuuuch less than 1 k, 10 years ago

Explain me this shit

[Anonymous No.15012236]

This world doesn't make sense anymore. It doesn't mean anything. I mean if you can succeed in life then you already won.

[Anonymous No.15012243]

>>15012212
read ray dalio's latest linkedIn post.

in short, because they expect other things to perform even worse and / or are forced to buy these kind of things by law

[Anonymous No.15012308]

>>15012212
It's for liquidity. There are limitations on the amount of fiat that an investment house like Goldman's can keep in a bank account, but fewer limitations for bonds. Nobody waits 10 years; they're a medium of exchange.

[Anonymous No.15012364]

>>15012212
Europoor here. Over here, bank accounts up to 100K EUR are insured by the state (and a mutual rescue fund). If the bank goes belly-up, you will be compensated.

Companies usually have much bigger accounts. If the bank goes bust, they lose serious money. They could split their accounts, but even if they split it up 20-fold, they'd still lose 5% if a bank tanks.

For them, it makes sense to incur a 1% loss over 10y because the alternatives are worse (look at Deutsche). For the average person, it means nothing as you simply do not buy those negative-yield Bunds but buy real equity fund shares or bluechip stocks.

[Anonymous No.15012367]

>>15012212

I once had access to a major financial firm owner's accounts. Guess what his entire portfolio consisted of.

Bonds. Thousands of them.

[Anonymous No.15012383]

>>15012308
Yes, but I am assuming that if a bond has a guaranteed loss unlike a guaranteed profit which was the case when these policies were drafted back then, then it is inevitable that these policies will be redrafted to reflect these new changes?

>>15012243
I get the theory but it just doesn’t make sense anon... let’s say I was the one buying this shit why would I guarantee myself a loss of let’s say -1% instead of just having my risk at 0 by keeping that money under my mattress for example

[Anonymous No.15012432]

>>15012367
How long ago was that?

>>15012364
Ah I see, this makes sense. I was thinking it from average person perspective too much. Any other explanations? I mean if this is the only logic behind it, doesn’t that mean that companies are fucking bearish in the economy and banks?

[Anonymous No.15012444]

>>15012212

Normal retail investors aren't. Commercial banks have accounts with their country / region's central bank. The central bank reducing rates below zero are in essence charging banks for the money they keep, literally trying to encourage them to find people / businesses to loan to - to avoid being affected by the negative interest rate.

Now, negative interest rates don't make sense to most people because you have the option of holding cash. But big banks and institutions don't. Or if they do want to hold millions or even billions in cash the security and storage costs would be very high. With digital currency there is not really a lot of difference between negative and positive interest rates (a negative interest rate is essentially a wealth tax). The only thing that matters is the interest rate relative to inflation.

[Anonymous No.15012450]

>>15012367
I believe you but corporate bonds are the complete opposite of government bonds. How did an idiot like you get access to a major financial firm owner's account.

[Anonymous No.15012487]

>>15012383
you can't hold that much cash under your mattress, they definilty hold cash already

[Anonymous No.15012515]

>>15012212
STINKY

[Anonymous No.15012521]

>>15012364
good old Einlagensicherung AUSTRIA GesmbH

[Anonymous No.15012537]

>buy bonds at -10% yield
>government forced to keep lowering rates further and further
>interest rates are now an annual -100%, making only a -10% a very attractive prospect in comparison
>sell your bonds at a handsome profit.

Easy money.

[Anonymous No.15012548]

also, there are certain regulations for banks and insurance companies in terms of risk management. If they manage other peoples money they have to invest a big part of it "safe". (due to the law!) Thus the demand for bonds

[Anonymous No.15012580]

>>15012450
I'm probably not as much of an idiot as you think.

I've also probably had sex with 10x as many women as you.

[Anonymous No.15012607]

>>15012580
Nice try. 10x zero is still zero.

[Anonymous No.15012652]

I am 20 yo and had sex 5 times with 5 different women

[Anonymous No.15012677]

>>15012212
>>15012236
>>15012243
>>15012308
>>15012364
>>15012367
>>15012383
>>15012432
>>15012444
>>15012450
>>15012487
>>15012515
>>15012521
>>15012537
>>15012548
>>15012580

Its mainly CBs buying bonds RN. The CBs are buying them with the QE funds.
https://www.bankofengland.co.uk/markets/quantitative-easing-and-the-asset-purchase-facility
TL:DR CBs are using funds that the next generation(s) will be paying for, to buy bonds.

[Anonymous No.15012692]

>>15012652
you are a slut

[Anonymous No.15012719]

>>15012432
>Any other explanations? I mean if this is the only logic behind it, doesn’t that mean that companies are fucking bearish in the economy and banks?
Partly, yes. We in crypto are always lamenting how bad fractional banking is, but in reality, fractional banking is no longer working as it used to.

Something has changed in the real economy (the one producing goods) that causes companies to invest less than they used to which means they don't take out as many loans as they used to. That in turn means banks would have to actually store cash (or have it deposited at central banks) instead of loaning it out again.

Now, storing cash is terribly expensive, and no one wants to do it. Companies do not want to build bunkers to store it and banks would rather get some interest than pay for the infrastructure and guards.

Part of the problem is that governments (outside the USA) have gotten more cautious about lending money to finance debt. Boomers, on the other hand, have a lot of cash on their hand and not many ways to invest.

What we are seeing is a market at work: economically strong countries like Switzerland and Germany simply can re-finance below zero interest because no one wants to incur the costs of stashing cash and/or having exposure to bank bankruptcy risk.

[Anonymous No.15012723]

>>15012243
This

Many pension plans are forced by law to buy government debt, also central banks buy it. this is why the Us stock market is doing so good, capital is fleeing garbage bonds and into stocks. At least when a company goes bankrupt they have assets that can be sold off, when a government defaults on their bonds you get NOTHING

[Anonymous No.15012734]

>>15012677
>CBs are using funds that the next generation(s) will be paying for, to buy bonds.
That's only part of the picture. Germany for instance takes out way less Bunds than they used to which depresses interest.

[Anonymous No.15012777]

>>15012212
>Seriously, who the fuck are buying these things at -0.8 % yield
pension funds
>and why are they keep on buying them?
because the law forces them to.
I don't know about the us, but eg. in Denmark and the Netherlands pension funds are forced to keep a big portion of total funds in highly rated bonds for "safety".
These rules now force them to lose money.

[Anonymous No.15012819]

>>15012719
Thanks fren! I get it now

[Anonymous No.15012821]

>>15012212
Greek 10y bonds yield lower than US 10 year bonds lmao

[Anonymous No.15012933]

>>15012719

Fractional reserve banking lead to a massive expansion of the money supply over the last 100 years. But now its at its limits because almost everyone uses banks now, and few people store cash. The proliferation of fractional reserve banking created huge inflation but that has come to an end.

[Anonymous No.15012943]

>>15012734
The BoE has used £433,716,000,000 of QE funds to simply buy bonds. That effects a market.
>The Bank of England owns about a quarter.
Under "Who owns the debt?"
https://fullfact.org/economy/guide-economy-debt/

Would not say I know anything about Germany, but these CB are working in unison.

[Anonymous No.15013238]

>>15012943

"QE" is just expansion of the money supply to address deflation. Theoretically the central banks can sell those assets to reduce the money supply again. Since there are many deflationary pressures right now it makes sense most central banks would be expanding their balance sheets. The biggest deflationary pressures are deleveraging after the GFC and increases in productivity due to technological advancements and the development of emerging markets like china. More per worker productivity = more goods can be bought for the same amount of currency, which is deflation, so the central banks expand the money supply to maintain their target inflation rates.