Bond Market’s Big Illusion Revealed as U.S. Yields Turn Negative

on , from bloomberg.com

For Kaoru Sekiai, getting steady returns for his pension clients in Japan used to be simple: buy U.S. Treasuries. Compared with his low-risk options at home, like Japanese government bonds, Treasuries have long offered the highest yields around. And that’s been the case even after accounting for the cost to hedge against the dollar’s ups and downs -- a common practice for institutions that invest internationally. It’s been a “no-brainer since forever,” said Sekiai, a money manager at Tokyo-based DIAM Co., which oversees about $166 billion. That truism is now a thing of the past. Last month, yields on U.S. 10-year notes turned negative ... (Read the full story)