11.08.2016, 16:47
Fitch: Negative-Yielding Sov Debt in Japan Down, Europe Up
OREANDA-NEWS. The global stock of negative-yielding sovereign debt fell modestly to $11.4 trillion as of August 2, compared with $11.5 trillion on July 15, according to Fitch Ratings. Japanese yields moved higher in late July in response to the latest monetary and fiscal policy announcements in Japan, while European sovereign yields continued to drift lower.
An increase in the amount of European sovereign debt with sub-zero yields offset in part the decline in the corresponding Japanese total, driving the $0.1 trillion two-week fall in the global stock of negative-yielding sovereign debt. The magnitude of the decline was reduced by the depreciation of the dollar versus the yen and euro in late July.
As seen in the chart below, Japanese debt still makes up the majority of negative yielding sovereign debt globally. However, the Japanese total has decreased from levels seen on June 27, when yields on Japanese government debt were less than zero out to 17 years in maturity. As of August 2, yields were negative out to nearly 12 years in Japan. This decrease in negative-yielding debt has been partially offset by a strengthening yen, keeping the Japanese total above $7 trillion. All else equal, an appreciation of the yen versus the dollar boosts debt levels in dollar terms.
Sovereign yields for most European countries fell modestly across the curve in late July. In Germany, sovereign debt with 13 years in remaining maturity yields less than zero. A strengthening euro helped push the total of European sovereign debt yielding less than zero to $4.2 trillion on August 2 from $4.0 trillion on July 15.
An increase in the amount of European sovereign debt with sub-zero yields offset in part the decline in the corresponding Japanese total, driving the $0.1 trillion two-week fall in the global stock of negative-yielding sovereign debt. The magnitude of the decline was reduced by the depreciation of the dollar versus the yen and euro in late July.
As seen in the chart below, Japanese debt still makes up the majority of negative yielding sovereign debt globally. However, the Japanese total has decreased from levels seen on June 27, when yields on Japanese government debt were less than zero out to 17 years in maturity. As of August 2, yields were negative out to nearly 12 years in Japan. This decrease in negative-yielding debt has been partially offset by a strengthening yen, keeping the Japanese total above $7 trillion. All else equal, an appreciation of the yen versus the dollar boosts debt levels in dollar terms.
Sovereign yields for most European countries fell modestly across the curve in late July. In Germany, sovereign debt with 13 years in remaining maturity yields less than zero. A strengthening euro helped push the total of European sovereign debt yielding less than zero to $4.2 trillion on August 2 from $4.0 trillion on July 15.
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