Effect of Negative Interest Rates on Stock Prices and Bond Yields

[Dexter Rutecki]

Ponzi schemes always outperform for awhile.

[pureantigravity]

“Have a heart that never hardens, a temper that never tires, a touch that never hurts, and beware of ponzi schemes.”
-Charles Dickens

[Core Shot]

Hard assets.

#endthread

[RootSkier]

but never buy or sell when you are high.

This is excellent advice. For cowards.

[pureantigravity]

"The Bank of England announced on Thursday 5 November that interest rates would remain at 0.10 per cent for now. However, it is being speculated that negative interest rates will be announced in 2021 if the rate of economic growth and national productivity continues to slow.

Jamie Johnson, CEO of FJP Investment, says: “Investors are clearly worried about the impact negative interest rates could have on their portfolios. While the Bank of England is yet to play this card, there remains a great deal of speculation that negative rates could be around the corner.

“If Covid-19 cases cannot be brought under control and strict lockdown measures remain, the recovery of the UK economy is going to be significantly hindered. In such a situation, we could expect negative interest rates to come into play sooner rather than later. In any case, investors must start preparing now to avoid any negative repercussions on their portfolios.”"


https://www.wealthadviser.co/2020/12...interest-rates




"A Bank of England official said in an interview that negative interest rates have worked “fairly well” in Europe, as the U.K. central bank continues to evaluate joining the European Central Bank with sub-zero interest rates.

Silvana Tenreyro, a Bank of England monetary policy committee board member, told the Yorkshire Post that “the positive evidence related to negative interest rate policy comes from Europe, where it has worked fairly well.”

She said negative interest rates have boosted lending. The ECB’s own research has stated negative interest rates have helped, while eurozone banks have complained those rates have pressured profit margins."

https://www.marketwatch.com/story/ba...pe-11605103689

[pureantigravity]

For first time ever, Canadians can get a mortgage rate below 1 per cent
https://www.theglobeandmail.com/inve...e-below-1-per/

"For the first time in Canadian history, a mortgage can be had with an interest rate below 1 per cent.

HSBC is officially the first lender to break that barrier, offering a five-year variable rate of 0.99 per cent, something that will probably have people who had 20-per-cent mortgages in the 1980s shaking their heads.

The offer applies to default-insured purchases only. But the bank is also advertising record-low uninsured five-year rates.

It’s just the latest captivating rate from a lender that’s been tormenting its banking competitors with below-market rates for more than three years."

[pureantigravity]

Skeptical is the rung above Acceptable.


Bank of Canada opens door to another rate cut — but not one below zero
Kevin Carmichael: Bank says it could go lower than 0.25%, but remains deeply skeptical of negative interest rates
https://financialpost.com/news/econo...-rate-possible

[pureantigravity]

A Bubble Is Inflating. Where Can Investors Hide?
https://www.barrons.com/articles/a-b...de-51612540675

"Real rates, which were about 4% before the global financial crisis, are now below zero almost everywhere."

Is that true?

[Talisman]

“Have a heart that never hardens, a temper that never tires, a touch that never hurts, and beware of ponzi schemes.”
-Charles Dickens

Charles Dickens (1812-1870) was prescient as Charles Ponzi wasn't born until 1882 and was active in his famous arbitrage scheme in the 1920's.

[Crusty]

A Bubble Is Inflating. Where Can Investors Hide?
https://www.barrons.com/articles/a-b...de-51612540675

"Real rates, which were about 4% before the global financial crisis, are now below zero almost everywhere."

Is that true?

Do me a favor; go to a bank and ask to borrow some money. You will find out the interest rates are not negative.

[pureantigravity]

Charles Dickens (1812-1870) was prescient as Charles Ponzi wasn't born until 1882 and was active in his famous arbitrage scheme in the 1920's.

I made up the quote. However you are correct that Charles Dickens was prescient.

How else could he have written about a ponzi scheme in his 1857 book Little Dorrit?

[pureantigravity]

Do me a favor; go to a bank and ask to borrow some money. You will find out the interest rates are not negative.

Not in Canada or the US. But mortgages with negative interest rates happened in recent years in Europe (and maybe elsewhere).