Germany Negative Yield vs ECB Deposit Rate | Forex Factory

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Germany Negative Yield vs ECB Deposit Rate

  • #1
  • First Post: Jan 14, 2012 11:32pm Jan 14, 2012 11:32pm
how can germany get a negative yield on their bond?
why investor (bankers) not deposit at ECB instead of take loss on germany bond?

from my understanding, both ECB deposit & Germany bond are ini EUR. so no matter how bad (eg. Greece leaves EZ), still deposit at ECB is more rewarding, right?

as long as Germany using EUR, i think is not rational. i'm confuse...
  • #2
  • Jan 17, 2012 8:51am Jan 17, 2012 8:51am
Are you referring to the real or nominal yield?
The 10 year german bund yield is currently around 1.8% Whereas the ECB deposit rate is 0.25% I believe.
The effect of inflation makes both real yields negative though

Quoting redbox
how can germany get a negative yield on their bond?
why investor (bankers) not deposit at ECB instead of take loss on germany bond?

from my understanding, both ECB deposit & Germany bond are ini EUR. so no matter how bad (eg. Greece leaves EZ), still deposit at ECB is more rewarding, right?

as long as Germany using EUR, i think is not rational. i'm confuse...
  • #3
  • Jun 30, 2012 7:52am Jun 30, 2012 7:52am
Quoting Jonnyislost
Are you referring to the real or nominal yield?
The 10 year german bund yield is currently around 1.8% Whereas the ECB deposit rate is 0.25% I believe.
The effect of inflation makes both real yields negative though
sorry for late reply.
i mean nominal yield for short term bond.
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  • #4
  • Jul 2, 2012 8:43am Jul 2, 2012 8:43am
One reason could be that people are placing bets that Germany will exit the Eurozone.

If you own a German bond currently priced in Euros it will have to be re denominated in Germany's new currency. Which will quickly appreciate (50% or so was the last estimate I heard)

That would be quite a home run investment
  • #5
  • Last Post: Aug 17, 2012 5:58am Aug 17, 2012 5:58am
Hey there, New to this thread. I imagine its because of differing inflation rates within the country vs eurozone. The real interest rate will be interest rate- Inflation rate.
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