German 10-year bond yields become negative or have an impact on the global economy

Published: Jun 25, 2019 17:31 (GMT+8)
German bond yields hit an all-time low on June 25, leading the core of the euro zone to win the quasi-core. The yield on German 10-year bonds fell 2 basis points to minus 0.330 per cent. It hit a previous record low of-0.328% on June 18th.

SMM6, 25 June: June 25, German bond yields hit an all-time low, leading the core countries of the euro zone to win the quasi-core countries. The yield on German 10-year bonds fell 2 basis points to minus 0.330 per cent. It hit a previous record low of-0.328% on June 18th.

On June 14th the yield on German bunds fell to minus 0.001 per cent for the first time since the Weimar republic. Half a month ago, data showed that negative interest rate Treasuries stood at more than $10 trillion worldwide.

There is a phenomenon of negative interest rates, that is to say, it is necessary to reverse the money to buy treasury bonds. But on the other hand, compared with other assets, government bonds are affixed with money, but they are the least, with yields on currencies, stocks, commodities or even lower. But it is easy to think that there will always be people in the market, and once that happens, Treasuries may no longer be safe.

The market is flooded with negative-yield Treasuries, forcing investors to turn to other targets, especially Treasuries, which are still relatively high, which will also further depress yields in other countries. On June 17, the yield on the 10-year Treasury note fell to its lowest level since August 2012, the yield on the 30-year note fell to its lowest level since February 2015, the yield on the two-year note also fell to its lowest level since February 12, and the yield on the five-year note fell to its lowest level since February 11.

Eurozone central banks have recently raised the threshold for government bond regulations. Under the European Basle Accord III, European banks must hold a certain proportion of government bonds on their balance sheets, which means that banks will be forced to buy these assets, so no matter how low yields fall, there is still basic buying in the bond market. Germany faces a similar situation. The global economy is slowing and in a deflationary crisis, and when investors expect the recession to continue, big-country Treasuries, as safe havens, will be the first choice for capital flows.

There are two main risks associated with negative Treasury yields. First, Treasury yields turn negative, particularly for insurers and pension funds that have to be paid to make up for the shortfall; second, if Treasury yields unexpectedly rise by 1 percentage point, the Treasury market alone could trigger a loss of $1 trillion.

James Nixon (James Nixon), chief European economist at the Oxford Institute for Economic Research, pointed out in a report released on June 10 that bond yields were at risk of a major correction and had begun to detonate since the European Union, MarketWatch reported.

Gross (Bill Gross), the bond king, also warned that central bank policy, which led to a large number of negative bond yields, would eventually set itself on fire. "Global bond yields are at their lowest level in 500 years, a supernova that will explode one day."

Scan QR code and apply to join SMM metal exchange group, please indicate company + name + main business

 

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or for more information, please contact: lemonzhao@smm.cn
For more information on how to access our research reports, please contact:service.en@smm.cn
Related News
KGHM and South32 launch US$725m Sierra Gorda expansion, lifting copper capacity 26%
6 hours ago
KGHM and South32 launch US$725m Sierra Gorda expansion, lifting copper capacity 26%
Read More
KGHM and South32 launch US$725m Sierra Gorda expansion, lifting copper capacity 26%
KGHM and South32 launch US$725m Sierra Gorda expansion, lifting copper capacity 26%
KGHM and South32 have broken ground on a fourth grinding line at the Sierra Gorda copper-molybdenum mine in Chile's Atacama region. The US$725 million expansion runs for three years from January 2027, with completion by late 2029 and full output in H2 2030. Ore processing capacity rises 26%, from 131,000 tonnes per day to 165,000 tpd. Annual copper output is projected to climb from 165,000 tonnes in 2025 to 195,000 tonnes, with 6,000 tonnes of molybdenum, 58,000 ounces of gold and 1.7 million ounces of silver as by-products. The project creates over 900 direct jobs and is funded from operating cash flow and debt. Unit operating costs are expected to fall about 10%.
6 hours ago
Emerita Extends Final Review of Iberian Belt West PFS, Release Expected in Coming Weeks
7 hours ago
Emerita Extends Final Review of Iberian Belt West PFS, Release Expected in Coming Weeks
Read More
Emerita Extends Final Review of Iberian Belt West PFS, Release Expected in Coming Weeks
Emerita Extends Final Review of Iberian Belt West PFS, Release Expected in Coming Weeks
Emerita Resources has provided an update on the Preliminary Feasibility Study (PFS) for its Iberian Belt West polymetallic project in Spain, saying the study is well advanced but remains under final technical review.​ The company said the review process has been expanded to include additional technical and quality-assurance oversight before publication. As a result, Emerita now expects the PFS to be released in the coming weeks rather than within the previously indicated timeframe.​ Iberian Belt West hosts copper, zinc, lead, gold and silver mineralization and is one of Emerita’s principal development-stage assets in Spain. The PFS is expected to provide updated detail on the proposed mine plan, processing configuration, capital requirements, operating costs and project economics.​ Emerita said the additional review work is intended to ensure consistency and completeness across the technical disciplines contributing to the study before it is finalized.​ The company did not announce a revised specific publication date, and no new production, capital or economic figures were disclosed in the latest update.​ The extended review delays the next major technical milestone for Iberian Belt West, but the company continues to indicate that the PFS is nearing completion. For the copper market, the significance of the study will depend on the production profile and project economics ultimately disclosed, particularly the contribution of copper relative to the project’s other payable metals. Attention will therefore remain on the timing of the PFS release and whether the final study materially changes the project’s development outlook.
7 hours ago
Cascadia Intersects 75.55 m at 1.19% Cu at Carmacks Copper-Gold Project
7 hours ago
Cascadia Intersects 75.55 m at 1.19% Cu at Carmacks Copper-Gold Project
Read More
Cascadia Intersects 75.55 m at 1.19% Cu at Carmacks Copper-Gold Project
Cascadia Intersects 75.55 m at 1.19% Cu at Carmacks Copper-Gold Project
Cascadia Minerals has reported additional drill results from its 2026 exploration programme at the Carmacks copper-gold project in Yukon, Canada, with new step-out drilling extending mineralization at Zone 2000S beyond the boundaries of the existing Mineral Resource.​ Drill hole CD-26-058 returned 75.55 metres grading 1.19% copper, 0.97 g/t gold, 10.4 g/t silver and 335 ppm molybdenum, equivalent to 2.18% copper-equivalent. The interval included 48.66 metres grading 1.61% copper, 1.39 g/t gold, 15.1 g/t silver and 475 ppm molybdenum, equivalent to 3.03% CuEq.​ Within the same hole, a higher-grade interval of 14.50 metres returned 2.30% copper, 2.68 g/t gold, 29.5 g/t silver and 1,015 ppm molybdenum, equivalent to 5.08% CuEq.​ A second hole, CD-26-059, intersected 93.99 metres grading 0.96% copper, 0.70 g/t gold, 4.6 g/t silver and 919 ppm molybdenum, equivalent to 1.94% CuEq. This included 63.97 metres at 1.26% copper, 0.96 g/t gold, 6.3 g/t silver and 1,049 ppm molybdenum, equivalent to 2.52% CuEq.​ Cascadia said the latest results continue to expand mineralization at Zone 2000S beyond the limits of the current Mineral Resource and highlight the higher-grade nature of the extension. The reported drill intervals represent drilled thicknesses, with true widths estimated at approximately 60–70%.​ The latest step-out results indicate that copper-gold mineralization at Zone 2000S extends beyond the boundaries of the current Carmacks Mineral Resource. The broad intervals and higher-grade internal zones could support future resource expansion if additional drilling confirms continuity. However, the new intersections have not yet been incorporated into an updated Mineral Resource Estimate, meaning their ultimate impact on project scale and mine planning remains to be determined.
7 hours ago