So much for that.
One starts running out of adjectives to describe just how low interest rates globally have gotten. Here's one description, courtesy of Merrill Lynch's Chief Global equity strategist Michael Hartnett:
“Japanification” of rates almost complete; average US/UK/German bond yield
has rallied from 5% to 1% since 2007; 17 countries now have 2-year bond yields below 1%; 10 countries (with combined bond market cap of $27 trillion) have yields out to 2-years on curve at 0%; average yield on 6-month bill auctions in Germany -0.034% and in France -0.006%, i.e. negative.
has rallied from 5% to 1% since 2007; 17 countries now have 2-year bond yields below 1%; 10 countries (with combined bond market cap of $27 trillion) have yields out to 2-years on curve at 0%; average yield on 6-month bill auctions in Germany -0.034% and in France -0.006%, i.e. negative.
Moody’s AAA corp bond currently yielding 3.6%, lowest since June 1958;
Moody’s BAA corp bond currently yielding 5.0%, lowest since Nov 1965.
http://rcr.ml.com/Archive/11183495.pdf?w=dglen%40bpbtc.com&q=fN9V0PQa8G3pElDa7-dZhQ&__gda__=1342183164_c29d667aace0d1a3ab991c7080ba579d
Earlier this week, the U.S. Treasury sold 10 year Treasury notes at an all-time record low yield: 1.459%. Demand was robust, apparently lead by the Chinese government. Today's yields are more than 20 basis points lower than the levels seen at the height of the financial crisis in the spring of 2009.
Writing in this morning's Financial Times, Gillian Tett reports that corporate cash levels continue to move higher, despite in many cases negative interest rates. The mood of uncertainty and fear permeates the business world, just as it does the investing public:
That
is partly because many American companies are profitable. But it is
also because companies are holding onto this money, rather than spending
it on productive investments or giving it to shareholders, so fearful
are they about the future. Cash has thus become like a corporate
security blanket, something executives cling to in frightening times.
In some senses, all of this is already well known. But what is less
widely appreciated is that companies are not just refusing to use their
money to invest in tangible ventures – they are running scared from the
capital markets too. In 2006, the AFP says, corporate treasuries placed a
mere 23 per cent of their funds in banks. But last year, the proportion
of funds sitting in banks doubled – and this year it rose above 50 per
cent.
http://www.ft.com/intl/cms/s/0/e234e886-cc38-11e1-9c96-00144feabdc0.html#axzz20R0JwEHI
Interesting, all of this is occurring at a time when some economists are seeing possible signs of a economic pick-up in the second half of 2012, as the New York Times reported this morning:
Despite the recent run of disappointing economic data, a broad range of
experts and forecasters expect the economy to improve slightly in coming
months, thanks to lower oil prices and new signs of life from sectors like automobiles and housing....
This week, Macroeconomic Advisers, an economic consultancy often cited
by policy makers, estimated the annual rate of growth in the second
quarter at just 1.2 percent — well below the pace needed to reduce the
unemployment rate. But the firm also projected growth to accelerate to
around 2.4 percent in the third quarter.
“The pace of economic growth is picking up, but not to a rate that is
very robust,” said Joel Prakken, the chairman of Macroeconomic Advisers.
“It certainly is no great shakes.”
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