Wells Fargo Investment Institute - Living in a Negative Interest-Rate World - Insights - Investing

Living in a Negative Interest-Rate World

Wells Fargo Investment Institute - October 2019

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In this Wells Fargo Investment Institute report, “Living in a Negative Interest-Rate World”:

  • Currently, we can observe two types of negative interest rates in developed markets: negative policy rates driven by central banks and the negative yield to maturity of several bonds.1
  • Negative yielding debt now comprises more than 20% of the Bloomberg Barclays Global Aggregate Index.2 While negative yields have been seen in many developed markets overseas, investors have wondered whether the U.S. could face negative domestic fixed-income rates ahead.
  • Negative interest rates have had a major impact on the banking sector in Europe and Japan, and bank investors also are focused on this question.
  • We do not believe that negative interest rates are a near-term risk for U.S. fixed-income markets. We do believe that investors should consider different global investment strategies in today’s negative- and low-yield environment. We outline these strategies in this report.

Download the report (PDF)

What do falling—and negative—rates mean for you?

Now may be an excellent time to sit down with your relationship manager to determine how your portfolio can be managed in the face of negative rates. The Living in a Negative Interest-Rate World (PDF) report can be a valuable resource to help guide your discussions.

1 Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures and all coupon payments are made as scheduled.

2 Bloomberg Barclays Global Aggregate Index, October 22, 2019.