“More than €2 trillion-worth of eurozone government bonds trade on a negative interest rate. It’s a bubble that is bound to end badly…
“I think the Fed is going to have negative interest rates before the election because we’re going to be in a serious recession,” Schiff told Business Insider on Friday.
Categories
Chirp Chirp Japan Goes NIRP
The Bank of Japan brought the thunder Friday, shocking investors and economists after it pushed a key interest rate into negative territory in its latest attempt to reinflate the country’s economy.
Born under a bad sign. Is this the birth of a financial crisis? Normally when the Ted spread widens out 50 beeps the shit is about to hit the fan. So when treasuries and swaps invert what the hell does that say. A glut of treasurys nobody wants to buy? Uncharted waters. Stay tune. Good opp for the arbs– it is the analogous to the 1990s sub-treasury pricing anomaly on Euro bond swapped back to floating. Negative swap spreads may be the new Black. Black Monday that is.
From the Business Insider:
At least two unidentified members of the Fed think fed funds will/should be negative by endof 2015.
Categories
NIR: Fed Opens Pandora’s Box
“Thus, the aim of this paper is to give a concise review of the various strands of the literature dealing with negative interest rates from past to present. We show that, besides its anarchistic origins, there are two orthodox strands of research that show the potentially beneficial effects of negative interest rates, but have so far been unconnected in the literature. By highlighting the diverse origins of the proposal, we hope to convey the message that negative interest rates are not the ‘idée fixe’ of a monetary crank, but a serious policy proposal and that the issue should be further examined.”
Categories