For the first time ever, Japan sold 10-year Treasurys for a negative yield…
The Wall Street Journal reports Japan just sold $19.4 billion worth of 10-year Treasury notes. They yield -0.024%.
That means bond buyers pay the government to take their money. Japan will earn around $53 million from these bonds.
About 70% of Japan’s debt now trades at negative yields. That’s pushing investors into riskier bonds with longer-dated maturities. It’s the only way to earn positive interest. Japan’s 30-year Treasury now yields +0.79%.
Japan’s current debt is around $10 trillion. That’s more than twice its current gross domestic product (GDP).
Bottom line: Lending money to the world’s most indebted nation… to earn less than $8 a year… for 30 years… is crazy. Paying the government to take your money is even crazier.
A world of negative interest rates means more wrenching volatility lies ahead. Follow Tom’s advice: Keep plenty of cash outside the banking system.
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