Rock Bottom

BofA Merrill Lynch have just released a report revealing that 53% of all global government bonds are yielding just 1% or less.  This frightening statistic comes in the same week we have the IMF warning of an impending liquidity crisis (born of an illusion of never ending liquidity) and both the ECB and Bundesbank heads stating that extended low interest rates increase financial stability risks!  BofA went on to report that central bank assets (bond etc bought to print money) now exceed $22 trillion – the equivalent of the GDP of the largest (US) and third largest (Japan) economies in the world combined.  

To make this even more scary we now in Europe have the situation where a third of all sovereign bonds carry NEGATIVE yields.  Yep you have to pay the bank to keep your money… As you can see below, Germany is now up to 7 years yielding negative returns!

If any part of this seems real and sustainable, and can’t lead to financial market bubbles then maybe consider the chart below of the S&P500 as but one example…