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Jun 01, 2012, 05.09 PM IST | Source: Moneycontrol.com

Mecklai graph of the day: Risk aversion at its best

Mecklai graph of the day - The ongoing global uncertainty and particularly the Euro zone crisis seems to have created a Global rush for safer assets and hence have helped the 10 year yields on US, German and Japan government bonds to uncharted lows.

Mecklai graph of the day - Risk aversion at its best

The ongoing global uncertainty and particularly the Euro zone crisis seems to have created a Global rush for safer assets and hence have helped the 10 year yields on US, German and Japan government bonds to uncharted lows.

Yields on bonds issued by countries still seen as safe have collapsed in recent days as the European crisis entered a new phase centering on Spain.

Yields on 10-year German bonds, known as bunds, tumbled to a record low of 1.2% on Thursday, while U.S. bond yields on 10-year notes fell to 1.56% a 6 decade low and the Japanese government 10-year bond yield fell to a 9-year low of 0.81%.The primary reason for such a drastic fall in treasury yields have been due to mounting anxiety over Euro debt crisis. On the backdrop of such volatile global environment, investors are more concerned about principle and the return and hence have embraced low yields and returned to a safer asset class.

The resolution to the global uncertainty and euro zone crisis seems to be very distant at this stage hence the global rush to safe haven assets is likely to continue and under such scenario the bond yields of the below nations would continue to plunge further.

The below graph shows the price movements of 10 year yields of USA, Germany & Japan for past 3 months.

 

 

 

 

 

 

 

 

 

 

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