How To Profit From Brexit - Guaranteed!

George Yacik - Contributor - Fed & Interest Rates

With interest rates plunging all over the world, including right here in the U.S., many fixed-income investors are scratching their heads about where they can find something that pays more than 1% without taking on a pile of risk.

The answer is right under their noses. Plus, the return is way better than you can get on stocks and bonds (even gold!). Not only that, but the return is guaranteed.

What is this magic investment? Continue reading "How To Profit From Brexit - Guaranteed!"

Are We Ready For Negative Interest Rates?

George Yacik - Contributor - Fed & Interest Rates

With interest rates on 10-year Japanese government bonds already deep into negative territory and comparable German bunds just a basis point or two away, most of the world’s safest debt instruments are trading below zero. With the notable exception of U.S. Treasuries.

While we’re still a long way from reaching that point – the benchmark 10-year Treasury note ended last week at 1.64%, its lowest level in nearly a year-and-a-half and down more than 60 basis points so far this year – it’s certainly not too early to start thinking about it. After all, if it can happen in Germany and Japan and several other countries, why not here?

Switzerland’s 10-year government bond closed last week at negative 0.50%, while the comparable Japanese bond ended at minus 0.15%.
Germany’s 10-year bund, the benchmark for the euro zone, closed at just two basis points above zero. The average yield on all German government debt outstanding is now below zero.

In real life, this means that if you buy a Swiss or Japanese bond today and hold it to maturity, you’re guaranteed to lose money. Such a deal.

What’s driving this madness? Continue reading "Are We Ready For Negative Interest Rates?"