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If you hadn’t noticed, something completely different is happening. About a third of bonds are charging negative interest rates. Instead of investing in a bond, and then getting dividends or a bigger payout later, about a third of major government bonds are paying back less than you put in. It seems strange to people in the US and the UK, but it is so common now that all the 10 year and below bonds in Switzerland are negative. In Germany and Japan, it is almost all the 10 year bonds. Governments are trying to encourage asset reinvestment rather than asset accumulation. Investors are uncertain about the rest of the investment options, reflecting doubts about the future economies. In general, major segments of the investment community are in retreat, being willing to pay for safe havens. Unfortunately, the more they pull out of the market, the less there is for the current economy, which creates a self-fulfilling prophecy. One consequence is that of the two remaining positive bond issuers, UK and US, the Brexit has unsettled confidence in the UK leaving the US as a favored choice. The US economy is strong, but mostly because everyone else is weaker and more scared. One big question is, does the US become the safe haven that sees the world through the crisis, or does the contagion spread to the US too?

(Click on the chart for the link.)

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