Pimco says U.S. Treasury securities could soon have a negative yield
Pacific Investment Management Co. has joined the chorus of voices warning that U.S. Treasury bond yields may eventually go negative.
In a blog post Tuesday, Joachim Fels, global economic advisor at the fixed-income investing giant, said it’s “no longer absurd to think that the nominal yield on U.S. Treasury securities could go negative.” At least 11 countries have negative 10-year yields, and Germany’s 30-year yield joined the rest of its curve below zero last week.
U.S. 10- and 30-year yields were near their lowest levels this year, with the 30-year at 2.25%, close to its record low 2.088% in 2016. The 10-year Treasury yield, at about 1.73%, compares with around -0.59% for German bunds of the same maturity.
Negative U.S. yields require a “major Fed easing cycle” that remains “a possibility rather than a probability,” Fels wrote. “But if the Fed cuts rates all the way back down to zero and restarts quantitative easing, negative yields on U.S. Treasuries could swiftly change from theory to reality.”
https://www.latimes.com/business/story/2019-08-07/pimco-negative-yields-us-treasury-bonds
This isn't a welcome headline.
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