Bizarro World! 15 European Countries Now Have Negative 2Y Sovereign Yields (And Japan)

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As a measure of the problems facing Europe’s economy, 15 European “countries” now have negative 2 year sovereign yields.

The list includes France, Germany and Italy. And the European Financial Stability Facility (EFSF) which isn’t a country at all, but a temporary crisis resolution mechanism by created by the euro area Member States in June 2010 (The EFSF has provided financial assistance to the three little PIGS, Ireland, Portugal and Greece).

Much of Europe continues to be slow growing (<2%) in terms of GDP growth. And inflation rates are less than 2%.

Of course, Japan have negative 10 year sovereign yields along with Switzerland (and Germany is getting mighty close to negative 10 year sovereign yields!).

The implied Central Bank 3 month Policy Rates are also negative for the EuroZone, Sweden, Denmark, Switzerland, the Czech Republic and, of course, Japan.

I love this Bloomberg title: “ECB Studies Stimulus Options That Won’t End Up Hurting Banks.”

With euro-area inflation once again below zero and concerns mounting over the state of the global economy, ECB President Mario Draghi and his colleagues are considering whether monetary policy needs to give more impetus to the currency bloc’s recovery. The chief concern is that negative interest rates, especially if cut further, might squeeze banks’ profitability to the extent they pull back on lending to companies and households.

How about “ECB Studies Stimulus Options That Won’t End Up Hurting HOUSEHOLDS?” Like those where bank deposit rates are HIGHER than the inflation rate?