Denmark And German Sovereign Yields Negative

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.

The European Central Bank’s President, Mario Draghi, 8-year term is up in October … and  Christine Lagarde of the International Monetary Fund has been chosen to replace him. Will Lagarde continue Draghi’s policies (yes) or change course (no)?

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But Europe has been invaded by the bizarro legion.

Case in point. Both Germany and Denmark have negative sovereign yields out to 20 years. Germany, which has issued longer maturity sovereign debt, has slightly positive yields beyond 20 years.

gerden

And the German 10-year Bund yield is now below the ECB Main Refinancing Rate, ECB Deposit rate and the European Financial Stability Facility (EFSF) rate. How bizarre is that?

germbunds

Yes, the monetary Bizarro legion has invaded earth (or at least Japan and Europe).  And the US monetary policy has been bizarro since Alan Greenspan.

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