Unchartered Waters

Someone at the Washington Post LITERALLY cannot believe that Germany HATES free money.  To be fair, negative yields are confusing a lot of people.  Here’s Mohamed El-Erian with 10 things to know about negative bond yields: “The seemingly illogical willingness of investors to pay issuers to borrow their money is neither irrational nor driven by just noncommercial considerations,” thanks to European QE.  “The spillover effects also include a weaker euro, compression of other bond spreads and a boost for equities,” as well as “a more intense tug of war for U.S. Treasury investors.”  And finally, “There are few analytical models and even fewer historical examples, to help understand the broader economic, financial, political and social implications of all this…We are truly in unchartered waters.”  Meanwhile, NY Fed President William Dudley says that “if those very low market-based rates were to continue after the Fed began raising rates, ‘it would be appropriate to choose a more aggressive path of monetary policy normalization as compared to a scenario in which forward short-term rates rose significantly, pushing bond yields significantly higher.’”  


JPN: WSJ Says Government Pension Fund Major Force Behind Rally In Japanese Equities


EU: German Parliament Approves Greece’s Bailout Extension


WM: “If You’re A Money Manager, How Much Do You Really Want A Creative Analysis?”


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