by John Rubino
One of the oddest things in this increasingly odd world is the spread of negative interest rates everywhere but here. Why, when the dollar is generally seen as the premier safe haven currency, would Japan and much of Europe have government bonds — and some corporate bonds — trading with negative yields while arguably-safer US Treasuries are positive across the entire yield curve?
One answer is that the Bank of Japan and the European Central Bank are buying up all the high-quality (and increasing amounts of low-quality) debt in their territories, thus forcing down rates, while the US Fed has stopped its own bond buying program. So the supply of Treasury paper dwarfs that of German or Japanese sovereign debt. Greater supply equals lower price, and lower price equals higher yield.