20.05.20 05:45 ET
The United Kingdom beat the U.S. in the race to the sub-bottom by selling a 3 year bond with so much demand that it finished with a net negative yield. From Reuters:
The bond, which matures in July 2023, sold at an average yield of -0.003%.
While investors will receive an annual interest payment of 0.75%, they paid above face value for the bond so the actual return in cash terms is less than they have lent.
Let that sink in. The equity “rally” we have witnessed since the short term bottom or initial roar of the bear in March is not being validated by the smart money in the U.S. and now definitely not from jolly old England.
There is no economic or academic handbook for central banks warning the Bank of England, ECB, or Fed on how to deal with negative yielding sovereign bonds much less the issuance of such instruments.
The bond market does not trust that the remedies proscribed thus far with fiscal irresponsibility and helicopter money are working is best illustrated also in the markets by the UK 2 year yield:
Laugh as we might here in the New World, this too will happen to the United States sooner rather than later and that will be the indicator that the bear market and real economic stress is about to worsen, not improve as many would have the sheeple believe.