The Bond Market Goes Through the $14.5 Trillion Looking Glass
The value of bonds yielding less than zero has trebled since October. Expect renewed talk of helicopter money, MMT and sub-zero U.S. Treasuries.
“Why, sometimes I’ve believed as many as six impossible things before breakfast.”
Photographer: Getty Images/Hulton ArchiveWith negative yields becoming commonplace across even the longer maturities in many of the world’s government bond markets, fixed-income managers are letting their imaginations run a little wilder about what might come next. So brace yourself for renewed talk of helicopter money, the implementation of Modern Monetary Theory, and the prospect of the benchmark U.S. Treasury offering less than zero.
Bond investors have spent the past few years becoming accustomed to previously inconceivable developments in the markets. So they can be excused for developing an immunity to just how extreme recent shifts in the debt market have been, at the forefront of which is the explosion in the amount of negative-yielding debt.