Black Hole of Negative Rates is Dragging Down Yields Everywhere

by Christopher Whittall and Sam Goldfarb, Wall Street Journal
David Stockman’s Contra Corner

The free fall in yields on developed-world government debt is dragging down rates on global bonds broadly, from sovereign debt in Taiwan and Lithuania to corporate bonds in the U.S., as investors fan out further in search of income.

The ever-widening rush for yield could create problems if interest rates snap back, which would cause losses on investors’ low-yielding portfolios, or if credit quality falls. And the global yield grab is raising questions about whether rates can prove reliable economic indicators.

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