After two years of continuous decline, the total amount of negative yield bonds has turned to zero compared to the peak of $18 trillion. This level was last witnessed during 2010-14 when inflation was at one of the highest levels throughout the world. A similar situation is faced by the world even now.
The real impact of this reveals itself over a few quarters but there are already some signs of it. First is the loss the central banks incur on the bond trades and holdings as the price fall within a short period. Second, it makes capital expenditure expensive even for the governments, but the need of the hour is to increase the supply and keep GDP intact.
There are smaller impacts to the economy and other micro real-world impacts that result in increased volatility over time and even risk of a default scenario on a large scale as refinancing and leverage to pay dues becomes harder.
The duration of such a zero level in the current scenario is unknown as the inflation and interest rates are the result of the reconfiguration of the supply chain and geopolitics as we know it. This would create a longer duration of uncertainty that would only end either by the completion of inflation reduction or a crisis that would force an immediate reversal of interest rates. Both come with there own level of uncertainty and impacts.
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