Let’s talk about idiots.
Somewhere out there, some absurdly well-paid banker just placed his investors’ capital in yet another financial instrument which is guaranteed to lose money: Australian government debt.
47 investors participated in the Australian government’s $200 million bond tender; the participants typically bid the amount they’re willing to pay, and the highest bids win the auction.
In this case, and for the first time in Australia, every single one of the 47 bidders offered a price so high that it implies a negative interest rate.
Even the lowest bid in the auction, for example, implied a net loss… or an effective yield of NEGATIVE 0.015%. The highest price implied a yield of negative 0.085%.
What’s really bizarre is that this particular issue was for ‘inflation-linked’ bonds. Which means that if the government’s official monkey math shows that inflation is falling, the yield could actually become even MORE NEGATIVE.
Stupid is what stupid does.
The fleecing is almost complete.
Next will come the thinning of the herd…
WE HAVE BEEN WARNED
Yep.
What this means to me is that these folks KNOW something is coming soon and they are willing to take a small guaranteed loss instead of a huge unknown loss. Think about that. It’s the only thing that makes sense. Otherwise why invest in something you know is going to lose you money?