Report
How can a 10-year interest rate be negative?
We look at the cases of Germany and France. Their 10-year interest rates have been mostly negative since the start of 2019 in Germany and since mid-2019 in France; they were highly negative during the summer of 2020. How is this possible? Why has all this wealth not been converted into zero-yielding bank deposits ? This is especially so when it is hard to see interest rates becoming even more negative, which would result in capital gains on bonds. The only explanation is that regulations force some investors (insurers, pension funds, banks, foreign central banks) to hold bonds. The y are therefore subject to very intense financial repression.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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