Why are bond yields so low?

Why are bond yields so low?. When I started my career over thirty years ago, Australian ten year Government bonds offered a yield of around 14% and global bond yields were similarly high. The big question then was why they were so high? Now, it is why are they so low? The ten year bond yield in Australia is just 2.6%. In the US its 2%, Spain 1.6%, Germany and Japan just 0.4% and in Switzerland it's actually -0.04%. (Yes in Switzerland you pay the Government to lend them money - as the Swiss central bank has set short term interest rates even more negative). This is an important issue because if you buy these bonds and hold them to maturity those yields are the annual returns you will get! This note looks at why bond yields are so low, whether it's ultimately sustainable and what it means for investors. (VIEW LINK) @ampcapital


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