Continuing market volatility and the so-called ‘flight to safety’ by investors worldwide has seen yields on the 10-year government debt of Germany dip below zero for the first time on record.
The yield on the bond fell to -0.001% from around 0.002% in early trading on Tuesday morning. Markets continue to be highly volatile as UK opinion polls suggest that the odds are narrowing on a vote for ‘Brexit’ on June 23 when British voters decide whether the country will remain in the European Union (EU).
The 10-year bund is the latest German government debt that offers a zero or negative yield. Last week, Germany’s Commerzbank AG estimated that almost two-thirds of outstanding German sovereign debt now yields below -0.4%. The move lower has been contributed to by the European Central Bank’s (EU) massive bond buying programme, as part of its quantitative easing (QE) measures that aims to reduce financing costs across the Eurozone.
An analysis issued by Rabobank read: “Ten-year bund yields are moving relatively comfortably into negative territory as the countdown continues towards the UK’s June 23 referendum [amid] hedging demand and safe haven flow.
“As it stands, our year end forecast for 10-year bund yields stands at -10bp. The risk to these projections is slanted toward the downside”.
The US money market fund reforms came into effect in 2016 and are already dramatically shaping US fund industry with investors flooding out of prime funds and into government securities. While the reforms are similar, they are not the same. GTNews interviews Yeng Bulter, global head of the cash business at State Street Global Advisors on the differences.
There are various ways for financial institutions to benefit from advanced technologies and business models provided by FinTech's. Whether a business' approach is radical or incremental, data management can help a company to increase their return on investment, argues André Casterman, INTIX.
Due to the low interest rate environment and Basel III regulation many corporate treasurers, who may have in the past been very reliant on the banking sector to provide them with cash management solutions, have been forced to explore alternative options as banks have been refusing short dated cash deposits.
Far and away, the largest financial market on the planet is the foreign exchange currencies market, where on average individuals and organisations trade more than $5 trillion daily. In the FX world, the ability to master the market isn't considered a luxury for treasury officers–it's a necessity.