Central banks sweat as European government bond yields sink

摘要

Central banks looking to buy assets for the ECB's quantitative easing programme face a huge headache as the pool of European government bonds available for purchase shrinks further. Ten-year German Bund yields hit a record low of 2.5bp on Friday. They are edging close to 0% as concerns about the global economy and ramifications of a potential British exit from the European Union send investors scrambling for safe assets. The ECB has self-imposed restrictions as to which bonds it can buy, and those that yield lower than the minus 40bp deposit rate are not eligible for the programme. However, this restriction is backfiring as more and more bonds go negative.