Tuesday, April 14, 2015

Negative Yields

From the Wall Street Journal, and other sources: We are living in the midst of historic financial times. While that may not sound exciting, it is highly unusual and virtually unprecedented for bond yields to fall below zero. What does that mean? It means that a lender of money agrees to pay an interest rate to the borrower, for the luxury of lending him money. Read that last sentence several times until it sinks in.

No comments: