OPEC officials meeting in Vienna raced to salvage an oil-production deal on Wednesday after Iran said it was likely to reject any agreement that raised output from the group.
Bond investors are looking pretty pessimistic on growth.
As the U.S. and China move closer to a trade war and the European Central Bank prolongs stimulative rates, traders are piling into the safety of government debt and enlarging the stock of bonds with below-zero yields. In just six days through Tuesday, the world’s pile of negative-yielding debt surged almost $1 trillion to $8.1 trillion, according to data compiled by Bloomberg.
The falling yields are a signal that investors think the global economy will be unable to muster significant increases in inflation or output.
ECB President Mario Draghi last week said policy makers expect to keep rates “at their present levels at least through the summer of 2019 and in any case for as long as necessary” to meet inflation targets. Bunds rallied, sending 10-year yields below 0.4 percent and stoking Treasury prices in sympathy — even as the ECB announced the end of its bond-buying programme.
On Tuesday, the flight to safety took on more urgency as the U.S. stepped up tariff threats against China and the Asian nation promised to retaliate. Paul Krugman, the Nobel Prize-winning economist and liberal commentator, said the market may still be downplaying risks to the global economy.
“I’ve been amazed at the complacency of markets as Trump marches off to trade war,” Krugman tweeted Tuesday. “We don’t know that he’ll go all the way, and break up the global economy. But surely there’s a substantial chance. 50%? 30%?”
Even Italian short-dated government bonds now trade below zero, having shrugged off the political turmoil that sent yields into positive territory last month.
The stock of bonds with yields below zero comprises obligations issued by governments, companies and mortgage providers around the world which are members of the Bloomberg Barclays Global Aggregate Bond Index.
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