Bonds used to be risk-free returns: now they’re return-free risk

Mario Draghi is playing his cards close to his chest over quantitative easing, leaving investors scratching their heads over where to put their money

Barry J Whyte

Chief Feature Writer @whytebarry
14th January, 2015
Bonds used to be risk-free returns: now        they’re return-free risk

Last week, the yield on two-year German bonds fell to minus 0.11 per cent. Such a yield means that, instead of investors putting their money safely in bonds and earning a modest return, they were willing to lose 0.11 per cent of their capital – essentially, paying a fee to the German government – simply to ensure they didn’t lose any more.

At the same time, the eurozone slipped into deflation, with prices on ordinary...

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