Earlier in the week, the yield on ten-year government bonds of the Netherlands fell to minus 0.007 per cent. First time in the history of trading into negative territory (minus 0.001%) of the Dutch paper showed on Friday, 8 July.
Thus, the Netherlands has joined the list of countries whose debt securities do not bring income to the investors. According to rating Agency Fitch at the beginning of June this year at the club, "negative return", there were 14 States. The membership, in particular, "issued" Switzerland (all editions its bonds have a negative yield), Germany, Japan, Denmark and Italy.
The aggregate value of sovereign debt with a negative yield was on may 31, $10.4 trillion, estimated by Fitch based$7.3 trillion in long — term liabilities of $3.1 trillion — short-term). In June and early July, these volumes increased significantly because of the decision of the British to withdraw from the European Union.
Assessment of Bank of America Merrill Lynch, is now the sum of the securities with a negative yield exceeds $13 trillion. Corporate bonds also gradually drawn into this swamp — analysts say about bonds of about $250 billion, for which it is impossible to obtain a percentage.
And approach all new members of the club. For example, the yield on bonds of Lithuania is currently around 0.5%, Taiwan — 0.7 percent. On paper all of the key issuers is experiencing a drop in profitability. On Friday, 8 July, the yield on us ten-year government bonds fell to 1.36% at least 2012.
The reason for this new reality is that investors in the conditions of global instability in financial markets, expectations of a slowing Chinese economy, falling commodity prices, the volatility of regional currencies, and now Brexit tend to invest in safe assets, i.e. government securities, thereby reducing their profitability.
High demand for government bonds means that the money Central banks pump up their economy not go into the real sector, and hence there is no basis for sustainable growth.
In other words, the negative yield is the evidence of serious global problems. One of the key here is the increasing volume of borrowing by States and corporations.
According to estimates by McKinsey, since the financial crisis of 2007-2008, the global debt increased in 2014 by $57 trillion to $200 trillion, or 250% of global GDP. Over the past year, this value increased even more.
Grant Williams, strategy adviser, the Fund Vulpes Investment Management and cofounder of Real Vision TV channel, recently released a forty-minute film "Crazy" (Crazy), which refers to too much debt, which became a big problem.
He blames Central banks (including the U.S. Federal reserve), who spend too easy monetary policy. According to his calculations, after the crisis of 2008 banks 650 reduced rate and brought us into the world of negative yield and huge debt.
"The investment landscape today is different from anything we've seen before," said Grant Williams in an interview with Yahoo Finance.
He also notes that the pumped money has not led to higher investment or to increase lending, nor to a surge in consumer activity. In addition to the bonds of "extra" money flowing and stock markets and derivative financial instruments (derivatives), primarily American. Monday, July 11, at the opening of trading in new York, the S&P 500 index reached another record high in 2137,01 points. And probably this is not the last record.
However, enjoy it is not necessary — fundamental factors for the growth in the value of stock no. The profits of American corporations has been falling for several quarters, the US economy will grow this year is forecast at a modest 2-2,2%, the national debt exceeds 100% of GDP, the Federal budget deficit has never since the 2008 crisis did not fall below 3% of GDP.
Debt is a problem not only for the U.S. government, but also for companies. According to analysts Andrew Chung and David Tesera of the S&P Global Ratings, the total debt of U.S. companies in 2015 is $6.6 trillion.
The total amount of debt last year grew by about $850 billion, while "cache" more was only 1% ($17 billion), according to the news Agency RNS with reference to Business Insider.
"More worrying indicator is the distribution of debt and cash between the analyzed companies: if you don't consider top 25 holders of cache, it turns out that the total debt in 2015 increased by $730 billion, whereas the cash flow from companies has become a $40 billion less" — according to Andrew Chang and David Tesher.
It turns out that the records of the stock market is pure speculation. It is also worth remembering that the recent crisis started with the collapse of the secondary market for mortgage securities. But nobody in a world of global insights did not. Now, according to some analysts, derivatives released more than $500 trillion, more than seven times the size of world GDP.
No wonder the candidate in presidents of the United States Donald trump reiterates his constituents: "Remember the word "bubble".
Overall, the picture is depressing — the noose around the world economy tighter The only question is when will begin to burst bubbles.
If you look at the history of the new century, we can see an unpleasant pattern. Every new US President came in the Wake of the crisis. George W. Bush in 2000, he inherited the bursting of the dot-com bubble, and Barack Obama — the financial crisis. By this logic, the bubble in the debt market and the stock should burst until November 2016, when elections of the new President of the United States. Some pessimists believe that a new round of crisis will redraw the world's finances, and stocking up on gold. Just in case.
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