Brexit Panic and Deflation Drive German Bund Yields Below Zero

The German Bundesbank is running out of bonds to buy as debt becomes too scarce

by Ambrose Evans-Pritchard

German 10-year bond yields have fallen below zero for the time in history as Brexit fears send investors scurrying into safe-havens, and Europe slides deeper into the psychological trap of deflation.

The eurozone is rapidly running out of AAA and AA-rated sovereign bonds for sale as the European Central Bank mops up the debt market under its quantitative easing programme, leaving pension funds and insurers desperately short of assets needed to match liabilities.

Yields tumbled across the eurozone’s core states and the Nordic bloc, briefly touching minus 0.006pc in Germany. Two thirds of the entire stock of German government debt is now trading at negative rates.

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