For retirement savings that are invested in bonds or fixed-income securities, the devil is called “negative interest rate polices” (also known as “NIRPs”).
Currently, there are five major world central banks that have fully implemented NIRPs. If you follow the financial markets closely, like I do, there isn’t a day that goes by when we are not hearing something about NIRPs.
U.S. investors believe negative interest rates aren’t something they should be concerned about. They believe they’re too far away from them, as these policies are being.
The Canadian Imperial Bank of Commerce (NYSE:CM), one of the biggest banks in Canada, just sold negative-yield bonds without a problem. It raised $1.8 billion by selling six-year bonds that yield minus 0.009%. (Source: “CIBC sells negative-yield bonds for 1st time,” CBC News, July 19, 2016.)
Yes, this just happened in Canada. This proves it’s not just a “far away” phenomenon anymore, that negative interest rates are not just limited to Europe or Japan.
A fact you should know about: according to data compiled by Bloomberg, almost $12.0 trillion worth of debt around the world has a negative yield and the majority of this debt has come from governments.
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