German 2-Year Bunds Yield Nothing
By Michael Aneiro
Whatever gripes you have about the paltry yields on your fixed-income investments, keep in mind it could always be worse.
For example, you could be buying German 2-year bunds, for which yields are less than paltry – they’re nonexistent. Germany has set a zero percent coupon on a new two-year bond to be auctioned on Wednesday, marking the first time this has happened on debt of such long maturity. Here’s an excerpt from a Reuters story on the subject:
Germany will pay no interest to borrow money over two years this week, taking advantage of investor demand for the euro zone’s safest bonds as worries about a Greek euro exit rattle financial markets…. [A]nalysts said the 5 billion euros of paper on offer should easily sell as investors seek to shelter their capital in top-rated debt before Greek elections next month.
By comparison, the yield on $35 billion of two-year Treasury notes sold at auction Tuesday was a frothy $0.300%. That’s 3 basis points above the April auction and nearly 8bp above the all time low auction yield of 0.222% at the August 23, 2011 auction, notes Adrian Miller of GMP
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