Happy Friday Berlin! The entire German yield curve is now trading below zero:
Which means if the government was to issue new bonds maturing up to thirty years from now, it could — barring a chronic deflation — expect to pay less to service the debt than it cost to borrow in the first place. The lower yield also implies a higher multiplier effect for any government spending programme.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
