Negative Yields on the Rise

The German Government bond recently sank back below the 0% threshold for the first time since 2016. The decline in yields is part of an overall trend as investors become increasingly skittish about the prospects for the global economy.

According to a recent article from MarketWatch, “the total sum of negative-yielding debt in bond issues represented in the Bloomberg Barclays Global Aggregate Bond Index stood at nearly $9.7 trillion, marking a more than 50% increase from September.”

The recent decline in German bond yields put the debt into the same club as Japanese bond yields which have also sunk to the lowest levels since 2016. The decline in yields comes at a time when the 3-month and 10-year U.S. Treasury curve has become inverted, with 10-year yields falling below the yield of the 3-month T-Bill.

The inversion of the yield curve is a powerful recession indicator and could spell trouble for the economy and markets. The lower yields go, the greater the cause for concern may be.

The decline in yields is also a function of increasingly dovish central bank rhetoric. The Federal Reserve has already done a complete 180 in recent weeks and now there is even talk of the central bank being forced to ease rates a bit. Although the central bank may try to stand pat, leaving rates at current levels, the economy has shown some serious cracks in recent weeks and could be slowing at a pace that is more rapid than many had anticipated.

Stocks remain near recent and all-time highs, but caution may be in order. Although a dovish Fed may keep a bit of a floor under risk asset prices, markets are not likely to take kindly to a recession. With numerous warning signals being flashed, now may be the ideal time to make moves that may insulate a portfolio from the next major recession. Given the potential for sharply lower equity prices and a significantly weaker dollar, now may be the ideal time to build a large allocation in gold.

Adding gold to your portfolio has never been easier and arguably never more important. As the next global slowdown turns into a global recession, stocks are likely to see major declines and the dollar could embark on a fresh leg lower as the Fed lowers rates and/or implements another round of QE. To learn more about the potential benefits of gold ownership, speak with an Advantage Gold account executive today. Our associates are here to answer any questions you may have and can even show you how to build a significant allocation in this key asset class using an IRA account.

Don’t wait for the next major stock market collapse or for a weaker dollar before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.

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