Bond yield curves in negative territory

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I just saw this quote in Seeking Alpha by "Goldmoney": "Entire AAA-rated bond yield curves are likely to be forced into negative territory, following the Swiss government bond market, which is already there. The denial of time-value will mean a government bond with no final redemption date priced at less than infinity will be technically a bargain. That is the measure of distortion." My background is statistics. I'm trying to teach myself economics. Thanks in advance.


The unusually shaped yield curve was in the news the other day. But it was attributed to the Fed buying 10-year T-notes, which temporarily lowered their yields relative to notes/bonds with shorter maturity. It sounds to me the quote cited by the author tries to extrapolate and make a statement about “perpetual” government bonds (“consoles”), which is not something governments are presently issuing. It is a problematic statement subject to the classical “Lucas critique.”

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Last updated on July 31, 2020