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''europe's Lowest Bond Yields Since The Black Death''

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I don't understand how bond yields can go lower than savings rates. Surely the only way to profit is through greater fool theory.

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I don't understand how bond yields can go lower than savings rates. Surely the only way to profit is through greater fool theory.

I imagine that, for some institutional investors, guarantees (allegedly promoting safety) require a proportion of funds to be in "ultra-safe" bonds, and on a scale that can drive loony prices. If you think of the negative yield as being an exit-fee from a riskier, higher-yielding, investment... it still makes sense. One has to remember that the bulk of investment is not done by individuals - institutions aren't fully protected by the FCSA's £85k-cap insurance.

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I don't understand how bond yields can go lower than savings rates. Surely the only way to profit is through greater fool theory.

A bond yield is a saving rate as well as a borrowing rate. It is the savings rate for savers who want the lowest possible default risk (if investing in government bonds).

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