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It’s absolutely crazy bonds are being bought at negative real rates but large sums of money must be parked somewhere by huge funds. Plus they often have bond to
by Josh379 8y ago
It’s absolutely crazy bonds are being bought at negative real rates but large sums of money must be parked somewhere by huge funds. Plus they often have bond to equity to commodity to fixed asset mandates so they have to enter what they know to be money losing positions.
- unknown_apostle 8y agoWhat's also interesting this time is the relationship between bond markets and modern ETFs. Especially in Europe, ETFs can be synthetic. In some cases this means they're made up of generic filler material (e.g. German bunds), with some secret hobo spices (derivatives) to provide the ETF's specific flavouring. Because of 10 years of central bank buying, all these bonds have been priced to perfection for deflationary scenarios. And as the world is mostly calibrated for small, well-announced yield changes, I wonder what an unexpected discontinuous "jerk" in yields would do to such ETFs.