Move Reflects Plummeting Borrowing Costs Across Europe http://www.marketwatch.com/story/fo...n-its-5-year-bund-2015-02-25?siteid=rss&rss=1
"The negative yield on the five means investors effectively pay the German state for holding its debt. Even so, bond prices—which climb when yields drop—are expected to rise further once the ECB starts its latest round of stimulus measures next month, meaning investors could potentially sell the bonds at a profit. “Hence, the negative yield is not scaring investors away,” said Jens Peter Sorensen, chief analyst at Danske Bank." Holy mackerel. "I'll pay Germany to loan them money `cuz somebody else down the road will pay me *even more*!" Talk about bigger fool.
Feel free to correct me but negative interest rate seems just like the hiring of a bank safe deposit box. Fees have to be paid.
Probably not a bad deal actually if you hold the bond to maturity, or interest rates continue to fall. Either the European situation continues to deteriorate in which case Germany may exit the Euro. Suddenly your German bond will be worth a lot more. Alternatively, the Euro situation continues to moderate and improves. In that case, you're winning on the exchange rate.
Hard day, eh? I feel for you. I bet if you double down tomorrow you'll be OK. Or since I posted this, you should double-double. Go for it. I dare you.
I live to serve. Triple triple. Unless that's too hard for poor ol' Martin? If so, we can certainly take it easy on the old guy.
Thanks to your inspiration, mate, I am now making money hand over fist on this ongoing bund squeeze... German yield now negative all the way to 7y. Yeeehaw!