Will 2015 be about the theme of negative yields? – BAML

FXStreet (Barcelona) - Analysts at Bank of America Merrill Lynch share that the Central Banks have now embraced negative deposit rates to ward off excess global liquidity, with 10 countries having negative yielding government bonds.

Key Quotes

“Global monetary policy remains a fluid and evolving narrative.

2013 was the story of low yields.

2014 became the story of no yield.

2015 will be all about the theme of negative yields.”

“Central banks have crossed the Rubicon of late, embracing negative deposit rate policies in an attempt to induce animal spirits in the banking sector (lend, not hoard) and ward off the inflow of excess global liquidity. The result has been the rapid growth in negative yielding government debt.”

“ [..] this isn’t just a Eurozone phenomenon. 10 countries now have negative yielding government bonds.”

“Much has been caused by negative interest rates from central banks (ECB, Switzerland, Denmark and Sweden), but not all. Note that Japan 5yr yields went negative yesterday.”

“[…] Japan has by far the largest stock of negative yielding debt, reflective of its sizeable government bond market.”