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Jim Bianco

Central Banks Can't Create Negative Rates by Themselves

Advances in technology and a growing global savings glut are pushing inflation and bond yields lower. 

The bond market has been turned upside down. 

The bond market has been turned upside down. 

Photographer: Mauro Pomentel/AFP

It’s been a decade since the worst financial crisis since the Great Depression, and yet here we are in a world where the highest government bond yield starts with the number “2.” Among the world’s major developed economies, only the English speaking countries – the U.S., U.K., Canada, New Zealand and Australia - still have monetary policy rates above zero. But there is more to low yields than monetary policy rates, and those factors are likely to stay in place for an extended period.

The following table shows the highest interest rates culled from the 20 largest developed countries from the policy rate to the 30-year bond. Over 200 interest rates were considered and the only one to yield above 2% is the 30-year U.S. Treasury bond at 2.04%. Never has the highest yield among these countries been so low.