Inflation Monitor – June 2016

Inflation Monitor Summary – Composite Ranking

Inflation Monitor - June 2016 Summary


* The Inflation Equilibrium is a quick summary of the whole data series of the inflation monitor. If you don’t like statistics, this is the chart for you.


Inflation Monitor – June 2016 – Introduction

If you are older than 30 years old, then you are probably scratching your head about negative interest rates. You have spent most of your life under the assumption that positive inflation is normal. You expect it. You probably treat it as a rule of nature rather than an assumption. Well, you are probably surprised to see negative interest rates around the world. While we have not yet seen them here in the US, it is only a matter of time till we see them here.

We have seen a strong push from the central banks around the world into negative interest rate territory. On June 5, 2014, the ECB introduced its negative interest rate policy (NIRP). On January 29, 2016, Japan introduced their version of NIRP. As of March 2016, the ECB dropped their deposit facility rate to -0.40. They are also started purchasing investment grade euro-denominated corporate debt. On June 14, 2016, Germany’s 10-year bund fell below zero to -0.033%. This is historic because it has never happened before.

As of now Switzerland, Japan, and Germany, all have 10 years sovereign bonds that are yielding negative interest rates. Where will this madness end? In case you didn’t think that was crazy, there’s more.

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