Why does Anyone Buy Negative Interest Bonds?

[Toddsterpatriot]

They are also discounted, and nobody is paying the face values, at least at the wholesale levels.

If the rate is negative, they're paying above face value.

Wrong.

Did you ever figure out how to buy a negative interest rate bond without paying above face value?

Let me know...…..

Read a book on how bond markets work. We've established long ago you have no idea how anything to do with business, finance, or markets work, you just think you do; playing " I Touched You Last!!!' with dumbasses is something I do in my spare time when nothing else is going on.

Why do I need to read a book for you to explain my error?

Or just admit I was right.

Why should I school you for free? It's obvious you never read anything now, so why bother with your ideological rubbish just because you ask?

Why should I school you for free?

For the satisfaction of proving me wrong.

Here's an exercise for you:

I hold two 2 year notes. One has a 0% coupon, the other has a 1% coupon.

What is the lowest price someone could buy them from me in order for him to have a negative YTM?

Thanks in advance!!

Unless you're gonna run away......again.

 

[Toddsterpatriot]

They aren't 'negative interest rates' if they're denominated in, say, U.S. dollars or Euros versus, say, Red Chinese yuans; they're excellent hedges for those with lots of unstable currencies, like rubles and the like. Contrary to popular belief, even with the ridiculously loose GAAP rules we have now there isn't an unlimited supply of solid convertible paper out there available to those in less than stable countries. They are also discounted, and nobody is paying the face values, at least at the wholesale levels. A 'loss' of 1 or 2% a year is probably less than they would lose to inflation and currency devaluation losses if left in a govt. bank. Singapore's banks are a major retail outlet for them. I'm sure there are more than few big customers in Hong Kong for them right now.

They are also discounted, and nobody is paying the face values, at least at the wholesale levels.

If the rate is negative, they're paying above face value.

Wrong.

but once it starts trading, high demand by investors can push its price up -- and therefore its yield down -- to such an extent that buyers no longer receive any payment.


Bloomberg - Are you a robot?

DURR...……….

 

[The Banker]

They aren't 'negative interest rates' if they're denominated in, say, U.S. dollars or Euros versus, say, Red Chinese yuans; they're excellent hedges for those with lots of unstable currencies, like rubles and the like. Contrary to popular belief, even with the ridiculously loose GAAP rules we have now there isn't an unlimited supply of solid convertible paper out there available to those in less than stable countries. They are also discounted, and nobody is paying the face values, at least at the wholesale levels. A 'loss' of 1 or 2% a year is probably less than they would lose to inflation and currency devaluation losses if left in a govt. bank. Singapore's banks are a major retail outlet for them. I'm sure there are more than few big customers in Hong Kong for them right now.

They are also discounted, and nobody is paying the face values, at least at the wholesale levels.

If the rate is negative, they're paying above face value.

Wrong.

Did you ever figure out how to buy a negative interest rate bond without paying above face value?

Let me know...…..

Read a book on how bond markets work. We've established long ago you have no idea how anything to do with business, finance, or markets work, you just thin you do.

Really?

So if I buy $100 of a negative bond and it constricts by 1% over the first year, that bond is now worth $99.00.

I paid MORE than the face value of the bond's final value.

NOOOO

You need to learn how bonds work.
Bonds are a commodity or asset, just like gold, stocks etc. They just happen to give an interest rate return (coupon), which can be positive or negative.

If you buy a bond for 90 with a -1% rate coupon and then many many more people buy that same bond and the price of the bond goes up to 110, and the coupon goes to -1.2% (the coupon rate drops as people buy the bond hence the negative rate to begin with lots of demand) would you care about the little -1.2% return or the massive 20+% return on the value of the actual bond?


BONDS HAVE AN PRICE LIKE A STOCK OR COMMODITY, they also have an interest rate coupon.

 

[The Banker]

Wrong.

Did you ever figure out how to buy a negative interest rate bond without paying above face value?

Let me know...…..

Read a book on how bond markets work. We've established long ago you have no idea how anything to do with business, finance, or markets work, you just think you do; playing " I Touched You Last!!!' with dumbasses is something I do in my spare time when nothing else is going on.

Why do I need to read a book for you to explain my error?

Or just admit I was right.

Why should I school you for free? It's obvious you never read anything now, so why bother with your ideological rubbish just because you ask?

Why should I school you for free?

For the satisfaction of proving me wrong.

Here's an exercise for you:

I hold two 2 year notes. One has a 0% coupon, the other has a 1% coupon.

What is the lowest price someone could buy them from me in order for him to have a negative YTM?

Thanks in advance!!

Unless you're gonna run away......again.

You don't understand bonds at all. Bonds are still a supply and demand asset.

Bonds have a coupon AND a value like a stock or commodity. Look up /ZN or /ZB, that is the chart for the US 10 yr and 30 yr bond futures, look how it changes. As the value goes up the coupon gets smaller.

BUT LOTS LOTS LOTS of people buy bonds not to hold them and collect the small coupon, but to trade them. They buy them anticipating the FED is going to have to cut rates etc, then everyone else buys them and the value of the bond goes up 5%, 10%, 20% etc. The small coupon means nothing and they just made a nice profit. They are a supply and demand asset, like stocks.

WIth all due respect you really don't understand bonds.

 

[Toddsterpatriot]

They are also discounted, and nobody is paying the face values, at least at the wholesale levels.

If the rate is negative, they're paying above face value.

Wrong.

Did you ever figure out how to buy a negative interest rate bond without paying above face value?

Let me know...…..

Read a book on how bond markets work. We've established long ago you have no idea how anything to do with business, finance, or markets work, you just thin you do.

Really?

So if I buy $100 of a negative bond and it constricts by 1% over the first year, that bond is now worth $99.00.

I paid MORE than the face value of the bond's final value.

NOOOO

You need to learn how bonds work.
Bonds are a commodity or asset, just like gold, stocks etc. They just happen to give an interest rate return (coupon), which can be positive or negative.

If you buy a bond for 90 with a -1% rate coupon and then many many more people buy that same bond and the price of the bond goes up to 110, and the coupon goes to -1.2% (the coupon rate drops as people buy the bond hence the negative rate to begin with lots of demand) would you care about the little -1.2% return or the massive 20+% return on the value of the actual bond?


BONDS HAVE AN PRICE LIKE A STOCK OR COMMODITY, they also have an interest rate coupon.

If you buy a bond for 90 with a -1% rate coupon

You have a list of the bonds that require the purchaser to pay the seller interest each year? Thanks!!

 

[Toddsterpatriot]

Did you ever figure out how to buy a negative interest rate bond without paying above face value?

Let me know...…..

Read a book on how bond markets work. We've established long ago you have no idea how anything to do with business, finance, or markets work, you just think you do; playing " I Touched You Last!!!' with dumbasses is something I do in my spare time when nothing else is going on.

Why do I need to read a book for you to explain my error?

Or just admit I was right.

Why should I school you for free? It's obvious you never read anything now, so why bother with your ideological rubbish just because you ask?

Why should I school you for free?

For the satisfaction of proving me wrong.

Here's an exercise for you:

I hold two 2 year notes. One has a 0% coupon, the other has a 1% coupon.

What is the lowest price someone could buy them from me in order for him to have a negative YTM?

Thanks in advance!!

Unless you're gonna run away......again.

You don't understand bonds at all. Bonds are still a supply and demand asset.

Bonds have a coupon AND a value like a stock or commodity. Look up /ZN or /ZB, that is the chart for the US 10 yr and 30 yr bond futures, look how it changes. As the value goes up the coupon gets smaller.

BUT LOTS LOTS LOTS of people buy bonds not to hold them and collect the small coupon, but to trade them. They buy them anticipating the FED is going to have to cut rates etc, then everyone else buys them and the value of the bond goes up 5%, 10%, 20% etc. The small coupon means nothing and they just made a nice profit. They are a supply and demand asset, like stocks.

WIth all due respect you really don't understand bonds.

Bonds are still a supply and demand asset.

That is awesome!!! Truly.

What in any of my posts made you believe I disagree with supply and demand?

 

[Picaro]

Wrong.

Did you ever figure out how to buy a negative interest rate bond without paying above face value?

Let me know...…..

Read a book on how bond markets work. We've established long ago you have no idea how anything to do with business, finance, or markets work, you just think you do; playing " I Touched You Last!!!' with dumbasses is something I do in my spare time when nothing else is going on.

Why do I need to read a book for you to explain my error?

Or just admit I was right.

Why should I school you for free? It's obvious you never read anything now, so why bother with your ideological rubbish just because you ask?

Why should I school you for free?

For the satisfaction of proving me wrong.

Here's an exercise for you:

I hold two 2 year notes. One has a 0% coupon, the other has a 1% coupon.

What is the lowest price someone could buy them from me in order for him to have a negative YTM?

Thanks in advance!!

Unless you're gonna run away......again.

Proving you wrong has never been an interesting challenge. Nobody runs form you, you just bore them and they ignore you.

 

[The Banker]

Read a book on how bond markets work. We've established long ago you have no idea how anything to do with business, finance, or markets work, you just think you do; playing " I Touched You Last!!!' with dumbasses is something I do in my spare time when nothing else is going on.

Why do I need to read a book for you to explain my error?

Or just admit I was right.

Why should I school you for free? It's obvious you never read anything now, so why bother with your ideological rubbish just because you ask?

Why should I school you for free?

For the satisfaction of proving me wrong.

Here's an exercise for you:

I hold two 2 year notes. One has a 0% coupon, the other has a 1% coupon.

What is the lowest price someone could buy them from me in order for him to have a negative YTM?

Thanks in advance!!

Unless you're gonna run away......again.

You don't understand bonds at all. Bonds are still a supply and demand asset.

Bonds have a coupon AND a value like a stock or commodity. Look up /ZN or /ZB, that is the chart for the US 10 yr and 30 yr bond futures, look how it changes. As the value goes up the coupon gets smaller.

BUT LOTS LOTS LOTS of people buy bonds not to hold them and collect the small coupon, but to trade them. They buy them anticipating the FED is going to have to cut rates etc, then everyone else buys them and the value of the bond goes up 5%, 10%, 20% etc. The small coupon means nothing and they just made a nice profit. They are a supply and demand asset, like stocks.

WIth all due respect you really don't understand bonds.

Bonds are still a supply and demand asset.

That is awesome!!! Truly.

What in any of my posts made you believe I disagree with supply and demand?

Because you don't seem to understand that people are buying these negative rate bonds and making large profits on them negating the little negative coupon.

 

[Toddsterpatriot]

Did you ever figure out how to buy a negative interest rate bond without paying above face value?

Let me know...…..

Read a book on how bond markets work. We've established long ago you have no idea how anything to do with business, finance, or markets work, you just think you do; playing " I Touched You Last!!!' with dumbasses is something I do in my spare time when nothing else is going on.

Why do I need to read a book for you to explain my error?

Or just admit I was right.

Why should I school you for free? It's obvious you never read anything now, so why bother with your ideological rubbish just because you ask?

Why should I school you for free?

For the satisfaction of proving me wrong.

Here's an exercise for you:

I hold two 2 year notes. One has a 0% coupon, the other has a 1% coupon.

What is the lowest price someone could buy them from me in order for him to have a negative YTM?

Thanks in advance!!

Unless you're gonna run away......again.

Proving you wrong has never been an interesting challenge. Nobody runs form you, you just bore them and they ignore you.

Proving you wrong has never been an interesting challenge

And yet, you consistently fail to do so.

 

[Toddsterpatriot]

Why do I need to read a book for you to explain my error?

Or just admit I was right.

Why should I school you for free? It's obvious you never read anything now, so why bother with your ideological rubbish just because you ask?

Why should I school you for free?

For the satisfaction of proving me wrong.

Here's an exercise for you:

I hold two 2 year notes. One has a 0% coupon, the other has a 1% coupon.

What is the lowest price someone could buy them from me in order for him to have a negative YTM?

Thanks in advance!!

Unless you're gonna run away......again.

You don't understand bonds at all. Bonds are still a supply and demand asset.

Bonds have a coupon AND a value like a stock or commodity. Look up /ZN or /ZB, that is the chart for the US 10 yr and 30 yr bond futures, look how it changes. As the value goes up the coupon gets smaller.

BUT LOTS LOTS LOTS of people buy bonds not to hold them and collect the small coupon, but to trade them. They buy them anticipating the FED is going to have to cut rates etc, then everyone else buys them and the value of the bond goes up 5%, 10%, 20% etc. The small coupon means nothing and they just made a nice profit. They are a supply and demand asset, like stocks.

WIth all due respect you really don't understand bonds.

Bonds are still a supply and demand asset.

That is awesome!!! Truly.

What in any of my posts made you believe I disagree with supply and demand?

Because you don't seem to understand that people are buying these negative rate bonds and making large profits on them negating the little negative coupon.

Because you don't seem to understand that people are buying these negative rate bonds and making large profits on them

You think the European banks holding much of their negative rate debt are making large profits on them? LOL!

negating the little negative coupon.

You find that list of bonds with a negative coupon yet?

 

[Toddsterpatriot]

Did you ever figure out how to buy a negative interest rate bond without paying above face value?

Let me know...…..

Read a book on how bond markets work. We've established long ago you have no idea how anything to do with business, finance, or markets work, you just think you do; playing " I Touched You Last!!!' with dumbasses is something I do in my spare time when nothing else is going on.

Why do I need to read a book for you to explain my error?

Or just admit I was right.

Why should I school you for free? It's obvious you never read anything now, so why bother with your ideological rubbish just because you ask?

Why should I school you for free?

For the satisfaction of proving me wrong.

Here's an exercise for you:

I hold two 2 year notes. One has a 0% coupon, the other has a 1% coupon.

What is the lowest price someone could buy them from me in order for him to have a negative YTM?

Thanks in advance!!

Unless you're gonna run away......again.

Proving you wrong has never been an interesting challenge. Nobody runs form you, you just bore them and they ignore you.

Proving you wrong has never been an interesting challenge

Are you Picaro's brother?

 

[Picaro]

Read a book on how bond markets work. We've established long ago you have no idea how anything to do with business, finance, or markets work, you just think you do; playing " I Touched You Last!!!' with dumbasses is something I do in my spare time when nothing else is going on.

Why do I need to read a book for you to explain my error?

Or just admit I was right.

Why should I school you for free? It's obvious you never read anything now, so why bother with your ideological rubbish just because you ask?

Why should I school you for free?

For the satisfaction of proving me wrong.

Here's an exercise for you:

I hold two 2 year notes. One has a 0% coupon, the other has a 1% coupon.

What is the lowest price someone could buy them from me in order for him to have a negative YTM?

Thanks in advance!!

Unless you're gonna run away......again.

Proving you wrong has never been an interesting challenge. Nobody runs form you, you just bore them and they ignore you.

Proving you wrong has never been an interesting challenge

And yet, you consistently fail to do so.

Yeah right, says the guy who can't figure out why negative interests rate central bank bonds are well over a $7 trillion dollar market now. Yawn.

 

[Toddsterpatriot]

Why do I need to read a book for you to explain my error?

Or just admit I was right.

Why should I school you for free? It's obvious you never read anything now, so why bother with your ideological rubbish just because you ask?

Why should I school you for free?

For the satisfaction of proving me wrong.

Here's an exercise for you:

I hold two 2 year notes. One has a 0% coupon, the other has a 1% coupon.

What is the lowest price someone could buy them from me in order for him to have a negative YTM?

Thanks in advance!!

Unless you're gonna run away......again.

Proving you wrong has never been an interesting challenge. Nobody runs form you, you just bore them and they ignore you.

Proving you wrong has never been an interesting challenge

And yet, you consistently fail to do so.

Yeah right, says the guy who can't figure out why negative interests rate central bank bonds are well over a $7 trillion dollar market now. Yawn.

can't figure out why negative interests rate central bank bonds are well over a $7 trillion dollar market now.

I already explained why. Banks buy them to make their capital requirements.

Hey, did you ever figure out how a bond has a negative yield if it doesn't trade above par?

Unless you're going to run away again? LOL!

 

[The Banker]

Why should I school you for free? It's obvious you never read anything now, so why bother with your ideological rubbish just because you ask?

Why should I school you for free?

For the satisfaction of proving me wrong.

Here's an exercise for you:

I hold two 2 year notes. One has a 0% coupon, the other has a 1% coupon.

What is the lowest price someone could buy them from me in order for him to have a negative YTM?

Thanks in advance!!

Unless you're gonna run away......again.

Proving you wrong has never been an interesting challenge. Nobody runs form you, you just bore them and they ignore you.

Proving you wrong has never been an interesting challenge

And yet, you consistently fail to do so.

Yeah right, says the guy who can't figure out why negative interests rate central bank bonds are well over a $7 trillion dollar market now. Yawn.

can't figure out why negative interests rate central bank bonds are well over a $7 trillion dollar market now.

I already explained why. Banks buy them to make their capital requirements.

Hey, did you ever figure out how a bond has a negative yield if it doesn't trade above par?

Unless you're going to run away again? LOL!

You still don't get it. When you buy a bond and there is a rally in bonds like we had globally starting in november you make a SUBSTANTIAL profit, much more than the little -0.25% that the bund has...

This is why people buy bonds with negative rates, because they think they will go more negative, and thus make a big profit.

 

[BuckToothMoron]

This is something I cannot make sense out of. So, have at it.

It’s the greater fool theory- they expect the price to go up, or said another way, they expect money to get even cheaper. The world wide investment climate is perverse. Investors are now buying stocks for stability and bonds for growth. Hey mr. Shit, meet Mr. Fan.

 

[Toddsterpatriot]

Why should I school you for free?

For the satisfaction of proving me wrong.

Here's an exercise for you:

I hold two 2 year notes. One has a 0% coupon, the other has a 1% coupon.

What is the lowest price someone could buy them from me in order for him to have a negative YTM?

Thanks in advance!!

Unless you're gonna run away......again.

Proving you wrong has never been an interesting challenge. Nobody runs form you, you just bore them and they ignore you.

Proving you wrong has never been an interesting challenge

And yet, you consistently fail to do so.

Yeah right, says the guy who can't figure out why negative interests rate central bank bonds are well over a $7 trillion dollar market now. Yawn.

can't figure out why negative interests rate central bank bonds are well over a $7 trillion dollar market now.

I already explained why. Banks buy them to make their capital requirements.

Hey, did you ever figure out how a bond has a negative yield if it doesn't trade above par?

Unless you're going to run away again? LOL!

You still don't get it. When you buy a bond and there is a rally in bonds like we had globally starting in november you make a SUBSTANTIAL profit, much more than the little -0.25% that the bund has...

This is why people buy bonds with negative rates, because they think they will go more negative, and thus make a big profit.

View attachment 270738

When you buy a bond and there is a rally in bonds like we had globally starting in november you make a SUBSTANTIAL profit,

Depends on the maturity, of course.

Looks like the 10 year Bunds had a positive yield in November.

much more than the little -0.25% that the bund has.

You send a check to the German government every year to pay them 0.25%?

 

[Toddsterpatriot]

Why should I school you for free?

For the satisfaction of proving me wrong.

Here's an exercise for you:

I hold two 2 year notes. One has a 0% coupon, the other has a 1% coupon.

What is the lowest price someone could buy them from me in order for him to have a negative YTM?

Thanks in advance!!

Unless you're gonna run away......again.

Proving you wrong has never been an interesting challenge. Nobody runs form you, you just bore them and they ignore you.

Proving you wrong has never been an interesting challenge

And yet, you consistently fail to do so.

Yeah right, says the guy who can't figure out why negative interests rate central bank bonds are well over a $7 trillion dollar market now. Yawn.

can't figure out why negative interests rate central bank bonds are well over a $7 trillion dollar market now.

I already explained why. Banks buy them to make their capital requirements.

Hey, did you ever figure out how a bond has a negative yield if it doesn't trade above par?

Unless you're going to run away again? LOL!

You still don't get it. When you buy a bond and there is a rally in bonds like we had globally starting in november you make a SUBSTANTIAL profit, much more than the little -0.25% that the bund has...

This is why people buy bonds with negative rates, because they think they will go more negative, and thus make a big profit.

View attachment 270738

That's a chart of US 10 years.....never went negative.

 

[The Banker]

Proving you wrong has never been an interesting challenge. Nobody runs form you, you just bore them and they ignore you.

Proving you wrong has never been an interesting challenge

And yet, you consistently fail to do so.

Yeah right, says the guy who can't figure out why negative interests rate central bank bonds are well over a $7 trillion dollar market now. Yawn.

can't figure out why negative interests rate central bank bonds are well over a $7 trillion dollar market now.

I already explained why. Banks buy them to make their capital requirements.

Hey, did you ever figure out how a bond has a negative yield if it doesn't trade above par?

Unless you're going to run away again? LOL!

You still don't get it. When you buy a bond and there is a rally in bonds like we had globally starting in november you make a SUBSTANTIAL profit, much more than the little -0.25% that the bund has...

This is why people buy bonds with negative rates, because they think they will go more negative, and thus make a big profit.

View attachment 270738

When you buy a bond and there is a rally in bonds like we had globally starting in november you make a SUBSTANTIAL profit,

Depends on the maturity, of course.

View attachment 270739

Looks like the 10 year Bunds had a positive yield in November.

much more than the little -0.25% that the bund has.

You send a check to the German government every year to pay them 0.25%?

Bond Yield Vs. Price
As bond prices increase, bond yields fall.

You definitely don't understand bonds. as the yield on the Bund drops to -0.25% the PRICE of the bond increases. This is the basics of bonds, you really have no clue what is going on here. You need to study bonds if you don't know that the yield falls when the price increases then that is why you have no clue what is going on here.


To be honest you just showed everyone how clueless you are right here, not knowing that price increases as yields drop. If you buy a bond and the yields drop your bond is suddenly worth more because it has a 0.25% coupon, when they are currently selling for -0.25%. understand.

You are lucky to have met me, now you have learned something.

 

[The Banker]

FOR ALL THE BOND BEGINERS


Bond prices and yields move in opposite directions, which you may find confusing if you're new to bond investing. Bond prices and yields act like a seesaw: when bond yields go up, prices go down, and when bond yields go down, prices go up.

Bond Prices and Yields Move in Opposite Directions

 

[Toddsterpatriot]

Proving you wrong has never been an interesting challenge

And yet, you consistently fail to do so.

Yeah right, says the guy who can't figure out why negative interests rate central bank bonds are well over a $7 trillion dollar market now. Yawn.

can't figure out why negative interests rate central bank bonds are well over a $7 trillion dollar market now.

I already explained why. Banks buy them to make their capital requirements.

Hey, did you ever figure out how a bond has a negative yield if it doesn't trade above par?

Unless you're going to run away again? LOL!

You still don't get it. When you buy a bond and there is a rally in bonds like we had globally starting in november you make a SUBSTANTIAL profit, much more than the little -0.25% that the bund has...

This is why people buy bonds with negative rates, because they think they will go more negative, and thus make a big profit.

View attachment 270738

When you buy a bond and there is a rally in bonds like we had globally starting in november you make a SUBSTANTIAL profit,

Depends on the maturity, of course.

View attachment 270739

Looks like the 10 year Bunds had a positive yield in November.

much more than the little -0.25% that the bund has.

You send a check to the German government every year to pay them 0.25%?

Bond Yield Vs. Price
As bond prices increase, bond yields fall.

You definitely don't understand bonds. as the yield on the Bund drops to -0.25% the PRICE of the bond increases. This is the basics of bonds, you really have no clue what is going on here. You need to study bonds if you don't know that the yield falls when the price increases then that is why you have no clue what is going on here.


To be honest you just showed everyone how clueless you are right here, not knowing that price increases as yields drop. If you buy a bond and the yields drop your bond is suddenly worth more because it has a 0.25% coupon, when they are currently selling for -0.25%. understand.

You are lucky to have met me, now you have learned something.

You definitely don't understand bonds. as the yield on the Bund drops to -0.25% the PRICE of the bond increases.

You mean the Bund trades above par? Don't tell Picaro. LOL!

You are lucky to have met me, now you have learned something.

Teach me more about your claim that a bond trading at 90 can have a -1% coupon.

You know what a coupon is, right?