Negative yield bonds rising again as virus concerns worsen

The global rush for safer assets has led to a significant rise in global, negative-yielding bonds, after declining for six months. The total of negative-yielding debt remains well below its high of more than $17 trillion in August, now standing at $12.4 trillion.

The pool of securities with a yield below zero rose by $1.16 trillion last week, the largest weekly increase for several years, as asset allocators shifted out of risk assets into the relative safety of government bonds.

Even with the concerns expressed at Davos and the growing size of sub-zero bond, policy makers setting ultra-low rates have assured markets the easy money will keep flowing. European Central Bank President Christine Lagarde said last week policy must remain “highly accommodative” with inflation struggling to stay much above 1%, though she did reiterate the bank will keep looking at the impact of negative rates.