Negative U.S. bond yields may become reality: PIMCO

[Eugene]

Source: Reuters

WEALTH AUGUST 7, 2019 / 12:18 PM / UPDATED 13 MINUTES AGO

Negative U.S. bond yields may become reality: PIMCO

Richard Leong, Jennifer Ablan
3 MIN READ

(Reuters) - Investors may have to grapple with the possibility of the once-unthinkable becoming reality - negative U.S. Treasury bond yields, according to money manager Pacific Investment Management Co (PIMCO).

Despite their dramatic drop since last week, U.S. Treasury yields remain among the highest for developed economies as the United States continues to enjoy its longest-ever expansion.

But a deteriorating global outlook exacerbated by an escalating trade war between China and the United States, the world’s largest economies, has stoked a torrent of demand for low-risk government debt.

Most German and Japanese bond yields are currently in negative territory.

“It is no longer absurd to think that the nominal yield on U.S. Treasury securities could go negative,” Joachim Fels, PIMCO’s global economic adviser, wrote on Wednesday in a blog post.

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Read more: https://www.reuters.com/article/us-global-bonds-negative-pimco/negative-u-s-bond-yields-may-become-reality-pimco-idUSKCN1UX1YC

[elleng]

1. Oh what do we do?

I was about to re-allocate my portfolio (such as it is) to reduce % equities and increase bonds and cds.