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10-YEAR GOVERNMENT BOND YIELDS: THE CHEAP GET CHEAPER What would you think if someone proposed that in exchange for you giving them $100,
While not as mind-bending as in Europe, long-term government bond yields across the globe remain historically low, with Canada’s yielding 1.4%. This is in line with Hong Kong and slightly below the US, but much lower than China’s seemingly ostentatious 2.6% yield. The common thread that runs through these countries and others is that yields have fallen significantly in the past year. Look for this to continue in the year ahead.
they would give you back $99.60 in ten years. Sound like a raw deal? For millions of investors around the world, this is just par for the course in today’s world of uncertain economic growth. This example illustrates the current yield on 10-year Euro Area government bonds, which has fallen by 53 basis points over the past year as investors have increasingly sought refuge from risk.
GOVERNMENT BOND YIELDS: LOW AND FALLING
3.0%
2.6%
2.5%
2.0%
1.6%
1.6%
1.5%
1.4%
1.4%
1.0%
0.7%
0.5%
0.0%
0.0%
-0.4%
0.5%
EURO AREA JAPAN BRITAIN CANADA
HK
USA
KOREA
CHINA
YR CHANGE BASIS POINTS
-53
-8
-50
-53
-38
-109
-44
-28
YR GOVT BOND YIELD
DATA: 10-YEAR GOVERNMENT BOND YIELDS
SOURCE: ORGANIZATION FOR ECONOMIC COOPERATION & DEVELOPMENT (OECD)
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