Recently, the Treasury bond yields of developed economies, especially those implementing negative interest rate policies such as Europe and Japan, have risen rapidly. The scale of global negative interest rate bonds has fallen sharply from the historical high of US $18.38 trillion at the end of 2020 to US $4.54 trillion, even 60% lower than us $1131 million at the end of 2021. At present, the scale of negative interest rate bonds is shrinking rapidly, which has an important impact on the sustained growth of the global economy. Mainly focus on the following three points.
First, the monetary policy shift of developed economies accelerated, pushing up the yield of national debt. In January 2021, the CPI of the United States rose sharply by 7.5% year-on-year, and that of the euro zone increased by 5.1% year-on-year, both reaching a new high in 40 years. In the face of sustained high economic inflation, the European and American central banks began to tighten monetary policy to curb hot inflation. The demand for bonds turned down, which further led to the decline of bond prices, the rise of yields and the sharp decline of the scale of negative interest rate bonds. In Europe, the Bank of England raised interest rates by 25 basis points to 0.5%, and plans to start the table contraction and stop reinvesting maturing bonds; The European Central Bank's "emergency bond purchase rate" will stop rising at the end of 2023. Among them, the yield of German five-year treasury bonds changed from negative to positive, from - 0.50% at the end of 2021 to 0.01% on February 11, 2022, and the yield of euro zone bonds with a term of five years or more changed to positive. Meanwhile, the yield of Japan's five-year treasury bond has exceeded zero for the first time since the implementation of the negative interest rate policy in 2016 (Figure 1).
Second, in the future, with the normalization of monetary policy, the era of negative interest rate will gradually move away, which will help activate the price signal function of interest rate and effectively guide enterprise investment. From the short-term perspective, the euro is stronger. With the shift of monetary policy in Europe and the United States, liquidity has changed from extremely abundant to neutral, which has led to the continuous decline of the scale of negative interest rate bonds, thus preventing the continuous outflow of fixed income bond funds and attracting a large number of investment portfolios into the eurozone. In the long run, getting rid of negative interest rates is conducive to sustained economic recovery. Negative interest rate policy is a special means for the central bank to stabilize the macro-economy during the crisis, but negative interest rate also leads to improper capital allocation, the decline of bank profitability, the obstruction of monetary policy transmission mechanism and credit creation, and damages the operation of the money market. As the Treasury bond yield gets rid of the negative value area, the transmission channel of monetary policy will be gradually unblocked, which is conducive to strengthening the ability of counter cyclical regulation and boosting the sustained recovery and growth of macro-economy.
Third, the sharp decline in the scale of negative interest rate bonds has increased the debt risk of highly indebted economies. With the shift of the European Central Bank to hawks, the borrowing costs of European highly indebted economies represented by Greece and Italy soared, increasing the risk of government debt. Under the impact of covid-19 epidemic, Italy implemented a large-scale fiscal stimulus plan and a series of government rescue programs, resulting in the increase of government debt from 134.8% of GDP in 2019 to 153.5% in 2021. On the one hand, with the European Central Bank ending the net asset purchase under PEPP in March 2022, the scale of negative interest rate bonds will gradually decline, the Italian government will be unsustainable by issuing new bonds at low cost, and the debt risk problem will gradually emerge. On the other hand, the trend of government bonds will affect corporate credit, and the reduction of the scale of negative interest rate bonds will push up the cost of credit financing. At present, the financing cost of highly rated Euro borrowers has exceeded 1% for the first time since June 2020.
