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Japan issues a 10 year government bond with a negative yield

Geoff Riley

1st March 2016

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The Japanese bond market had an historic day on Tuesday, selling 10-year bonds at a negative rate or yield. The news was the front page headline in the Financial Times. It seems that the negative yields were the direct result of speculators happy to buy the 10 year government paper for a short period of time in the expectation that the Japanese central bank will buy them back at a higher price as part of the quantitative easing policies designed to stimulate the Japanese banking system.

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Geoff Riley

Geoff Riley FRSA has been teaching Economics for nearly forty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD and Revision conferences in the UK and overseas.