The world’s cache of government bonds trading at negative yields has soared. How did this come about and how will it distort financial markets?

Global economic growth has been slowing, uncertainty growing. Investors looking for safety and reduced volatility have been big buyers of the highest-quality debt, driving yields ever lower. As a consequence, the world’s cache of government bonds trading at negative yields has soared. Eric Lascelles, chief economist for RBC Global Asset Management Inc., digs into what’s driving this phenomenon and looks at how the persistence of negative rates might change investor behaviour and risk exposure.

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