It looks like an era of easy money is coming to an end. One of the most visible indications of this is the recent rapid decline in the amount of negative-yielding bonds globally. As you can see on the chart above, the amount now stands around $4.9 trillion, down from the peak of more than $16 trillion in 2020.
Mostly this is because central banks worldwide have been withdrawing their emergency pandemic support, causing the stock of negative-yielding debt to nosedive in recent months as the reduced demand for bonds pushes their prices down and yields up.
Whether this is good or bad depends on your perspective. Negative rates were good for borrowers since it meant they effectively got paid to borrow money. However, it also hurt bond investors, who had to pay to lend money. In response, some investors ventured out on the risk curve in search of yield in more speculative assets, which might have produced a misallocation of capital in the global economy.
Regardless, however, the decline in the amount of negative-yielding debt in the world makes one thing abundantly clear for financial market investors: the era of easy monetary policy is becoming not so easy anymore.
This is intended for informational purposes only and should not be used as the primary basis for an investment decision. Consult an advisor for your personal situation.
Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.
Past performance does not guarantee future results.