RISE - Trapped Near Zero: Bond Yields Zombies And Unintended Consequences
Originally published on October 24, 2019
By Robin Marshall, Director Bond Research, Research & Analytics
When Japanese interest rates first fell towards zero, the Japanese government yield curve steepened sharply as it was assumed temporary, and that interest rates and bond yields would rapidly "normalise" or mean revert at levels more typical of the 1980s and 1990s. With about a 20-year lag, the Eurozone now appears to be experiencing the same phenomenon and has met similar policy responses.
Like Japan, Eurozone policymakers denied there was a deflation threat, or problem with the banking system, and