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Negative yields will not last forever, because negative yields do not really make economic sense. Right now it is propped up by institutional rules and pressur
by betterunix2 5y ago
Negative yields will not last forever, because negative yields do not really make economic sense. Right now it is propped up by institutional rules and pressures, but those institutions will eventually become antiquated if they have to accept negative real rates of return. Keep in mind that prior to COVID-19 interest rates were rising in the US, and it is nearly certain that interest rates will continue rising (we are seeing a short-term decline in rates now because of market forces, but the longer term trend is upward) for the next decade. Either Congress is going to work through its seemingly endless gridlock and start funding long-term solutions to problems (e.g. infrastructure) and inflation will accelerate as a result, or the gridlock will lead to a default on the debt and interest rates will spike.
One way or another interest rates will be forced to rise, especially at the longer duration end of the yield curve.