This just boggles my mind. Investors are paying the German government to take their money and hold onto it for 3 to 12 months:
Continuing the schizoid overnight theme, we look at Germany which just sold €3.9 billion in 6 month zero-coupon Bubills at a record low yield of -0.0122% (negative) compared to 0.001% previously. The bid to cover was 1.8 compared to 3.8 before. As per the FT: “German short-term debt has traded at negative yields in the secondary market for some weeks with three-month, six-month and one-year debt all below zero. Bills for six-month debt hit a low of minus 0.3 per cent shortly after Christmas…
Why would any rational person buy a bond that pays negative interest when they have a perfectly good mattress to put the cash under?
One of the commenters at Zero Hedge described it succinctly:
It’s like Ho’s paying tricks for sex.
