Bond Market’s Big Illusion Revealed as U.S. Yields Turn Negative
- Currency hedging costs soar for overseas buyers of Treasuries
- Yields on 10-year notes zeroed out for investors in yen, euros
Bond Illusion Revealed as Treasury Yields Turn Negative
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For Kaoru Sekiai, getting steady returns for his pension clients in Japan used to be simple: buy U.S. Treasuries.
Compared with his low-risk options at home, like Japanese government bonds, Treasuries have long offered the highest yields around. And that’s been the case even after accounting for the cost to hedge against the dollar’s ups and downs -- a common practice for institutions that invest internationally.