U.S. 10-year bond falls to record low yield of 1.36%

Global investors may have fierce appetites for United States government bonds. With immense volatility in the stock markets, investors are seeking out something safer. And they view U.S. government debt as a safe investment.

U.S. government bonds are high in demand from foreign investors. However, that doesn’t mean it’s a good thing.

The yield on the U.S. 10-year government bond fell to its lowest level ever on Tuesday: 1.36 percent. Yikes! The previous record was in the summer of 2012 when it dipped to 1.387 percent as investors were frightened of the collapse of Greece and the close calamity in Spain. Traders believe the 10-year yield still has room to fall.

Does this mean U.S. government bonds are sound? Not necessarily. Investors are ostensibly OK with U.S. bonds because a large portion of the government bond market is producing negative yields. Germany, Switzerland and Japan are just some of the many countries posting negative yields (SEE: Global Negative Bond Yields – Swiss 30-year bond yield dips into subzero territory).

Simply put: you’d lose money by just owning these bonds.

It was reported last month that there are nearly $12 trillion worth of government bonds trading at negative yields. Central banks are causing investors to lose about $24 billion per year because of negative interest rates (SEE: Central banks causing investors to lose $24 billion a year amid negative interest rates: report).

The global bond market is in a scary, bubble-like situation right now.

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