Chart o’ the Day: Sovereign Bond Yields

State Street’s Dave Mazza looks at six factors driving the 6-year-old global bond market, including demographics, financial regulation and others.

Here’s a look at the relative attractiveness unattractiveness of sovereign bonds, by country:

Source: Bloomberg Finance L.P., as of 2/2/2016

More than $7.1 trillion of government debt now yields less than zero.¹ Five-year nominal rates in Japan are negative 1.6%, which means investors are paying the government when they purchase Japanese government bonds. The picture is not much better in Europe, where five-year nominal yields are negative 1.3% in France and negative 0.8% in Switzerland.

But miniscule yield is better than negative yield, which has spurred many global investors to buy US Treasuries as a source of income. At the same time, the US government’s AAA credit rating on US Treasuries from S&P is attractive to global investors where bonds from their home country may have a positive yield but a lower credit rating.

Source:

6 Charts: How the Bond Bull Market Has Changed Traditional Bond Exposure (SPDR Blog)