• Amid increasing concerns about slowing global economic conditions and heightened U.S.-China trade tensions, the dollar value of global negative-yielding debt reached a new all-time high of just over $16 trillion this week.1 The value of negative-yielding debt has been driven mostly by Japanese government bonds, which fell back into negative territory in May, and German government debt, which has turned more-deeply negative in recent weeks.
  • U.S. Treasuries have participated in the broader global decline in yields as the 10-year yield has fallen more than 165 bps from its November 2018 high and the 30-year briefly fell below 2% this week for the first time ever.2
  • Yet even after the recent decline, U.S. government debt continues to enjoy a significant yield advantage compared to most other major developed markets.
  • July’s strong retail sales report showed that U.S. consumers have continued to spend, powering economic growth in the U.S. The report helps to allay recent recession concerns despite the considerable headwinds that have gathered around the global economy.
  • Despite the U.S. economy’s relative strength, U.S. Treasuries cannot escape the fact that government bond yields around the world appear set to remain low for the foreseeable future. Within this environment, investors could continue to struggle to find adequate levels of income.

1 Based on the Bloomberg Barclays Global Aggregate Negative Yielding Debt Market Value Index.
2 Bloomberg, as of August 15, 2019.

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