This Can’t Be Good – Swiss Issuing Negative Yield Bonds

Boy, do I have an investment for you!  Just send me 0.05% of what you want to invest and I will send you absolutely nothing in return!

Apparently the Swiss have been doing this for a while with 5-year bonds and this new issue is a ten year bond.  I admit I am not bright enough to understand why anyone would buy such a bond since you could just sit on your cash and be better off without lifting a finger.  And it is important to note that the coupon is not negative.  The bonds are just getting bid up to the point that the yield is negative.

My guess would be that perhaps some institutions are required to buy these bonds due to regulatory reasons or portfolios are structured where they must carry some sorts of sovereign debt.  I suppose I could also see someone who didn’t want to provide security for large amounts of cash buying them but there are lots of places still that will hold your cash without charging you for the privilege so even that doesn’t make sense.

It is a race to the bottom as each country tries to debase its currency faster than the next one just so they don’t go bankrupt trying to prop up their moribund and failing social welfare systems.  There is no way this can end well.

So if you are wondering where you can put your money while we wait for the end I would suggest sending it to ME!  I can promise a yield at least as good as the Swiss and I may even give you your principle back if you ask nicely and I haven’t spent it all on guitars and Dr. Pepper in the interim.

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