About $1 trillion of bonds have seen their yields turn negative this week, meaning 27% of the world’s investment-grade debt is now sub-zero. Thanks to the slew of global issuance in 2020 as governments and companies wrestle with the impact of the coronavirus, that remains below the 30% peak reached last year.
Despite optimism about a global economic recovery next year sparking a rush to riskier assets like stocks and corporate debt, continued monetary support from central banks and concern about the relentless spread of the coronavirus has maintained investor interest in sovereign bonds.
Bond bulls got a boost on Thursday when the European Central Bank boosted its asset purchase program by an additional 500 billion euros ($607 billion) in a bid to support the region’s economic recovery. Meanwhile, both Australian bills and Spanish 10-year debt saw sub-zero yields at auction for the first time.