Government bond yields turn negative for first time ever as investors rush for safety
Yields on benchmark Government bonds yesterday turned negative for the first time ever as investors rushed for safety.
This meant that, briefly, investors were paying to lend money to the Government instead of receiving a return on their cash.
When bond yields turn negative, it indicates that investors are prioritising preserving their money over getting any sort of return.
Yields on benchmark Government bonds yesterday turned negative for the first time ever as investors rushed for safety
The swing to negative yields was caused by a rush into gilts as the stock market tanked, amid fears coronavirus would cause the global economy to stutter to a halt.
This pushed up the price of the bonds, meaning their yield – or how much they pay out in interest relative to their price – slumped.
By the close, UK ten-year gilts were paying out a yield of 0.16 per cent, and two-year gilts were yielding just 0.08 per cent.
US Treasury yields also flirted with all-time lows, although they recovered slightly.