July 8, 2019 / 11:35 AM / 9 days ago

Graphic: 'The Incredible Disappearing Bond Yields'

LONDON (Reuters) - The past week has seen world bond markets reach new milestones, completing a collapse in borrowing costs for governments across the globe over the last 6 months.

FILE PHOTO: A sign of the European Central Bank outside the ECB headquarters in Frankfurt, Germany, March 7, 2019. REUTERS/Kai Pfaffenbach

The following graphics track the disappearance of yields and flattening of maturity curves across government bond markets this year:

1) EURO ZONE

After the nomination of Christine Lagarde to take over from Mario Draghi at the helm of the European Central Bank later this year, euro zone debt yields fell even further into negative yielding territory, as markets took the view that policy at the ECB will remain dovish. The yield on Germany’s 10-year Bund - the euro zone’s government debt benchmark - fell below the ECB’s overnight deposit rate for the first time ever.

2) UNITED STATES

With the Federal Reserve pivoting towards a dovish policy stance since the start of the year, yields on U.S. Treasuries have steadily fallen across the bond market curve, with the 10-year Treasury yield falling below the upper bound of the Fed’s interest rate band for the first time in 11 years. Only the 30-year Treasury bond yields higher than the upper bound of the Fed’s interest rate as of early July.

3) UNITED KINGDOM

The UK’s gilts market also hit another milestone, with the yield on the 10-year gilt falling below the Bank of England’s policy rate for the first time in 11 years.

4) SWITZERLAND

A recent Reuters poll showed a majority of economists believe the Swiss National Bank will hold its ultra-loose monetary policy until at least 2021. That expectation, coupled with the SNB’s policy of keeping the Swiss franc from appreciating against the euro, has pushed all long-dated Swiss government bonds into negative-yielding territory except for the 50-year bond.

(Reporting by Ritvik Carvalho; Editing by Toby Chopra)

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