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10 Year German Bond 0.075%
Old 04-24-2015, 12:29 PM   #1
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10 Year German Bond 0.075%

I just want to understand the logic of buying this bond. Almost no return for 10 years. With the added advantage of massive interest rate risk.

Who would be dumb enough to buy this thing?
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Old 04-24-2015, 12:31 PM   #2
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Insurance companies, pension funds and banks with mandates in their charter to invest a minimum or fixed allocation in sovereign AAA bonds.
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Old 04-24-2015, 12:54 PM   #3
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Originally Posted by MichaelB View Post
Insurance companies, pension funds and banks with mandates in their charter to invest a minimum or fixed allocation in sovereign AAA bonds.
This is the kind of thing that distorts indexing--whenever a mandate exists that effectively disconnects the price of an asset (stock or bond,etc) from the market value that free buyers are willing to pay. Because, the buyers aren't free to make their own judgements. Some of these mandates you mention are the result of government requirements--the same governments that are served by artificially depressing the effective interest rates for their bonds.
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Old 04-24-2015, 03:37 PM   #4
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Heck, a few days ago the rate was negative up to the 9 year mark....

So, making money instead of losing it seems like a windfall....
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Old 04-24-2015, 03:50 PM   #5
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Front running ECB QE purchases...
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