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Sub-zero Bond Yields Seen Persisting in Europe

Negative yields could last through 2020, Vanguard exec says.

By Lukanyo Mnyanda, Bloomberg | Updated on January 27, 2017

Good news for bond bulls: as far as some of the world’s biggest investors are concerned, negative yields will be a feature of Europe for years to come.

Vanguard Group says the euro zone’s sluggish economy, where policy makers are barely halfway to reaching their inflation target, means monetary easing will persist, and sub-zero bond yields with it. Deutsche Asset Management predicts rates on benchmark German two-year notes will climb about 0.2 percentage point in 2017 — just twice the advance in the past month and keeping them well below the zero threshold.

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