Negative interest rates and bond prices

Since interest rate rises cause bond prices to fall, what might we expect if interest rates were negative?

"One obvious side effect of negative interest rates is that they compel retirees, pension funds, and others who need positive cash flow to move further out on the risk spectrum, says Jensen. “Rather than accepting extremely low rates in government bonds, many fixed-income managers choose high-yield bonds, emerging market debt, and high-dividend equities.” The result, according to Jensen, would be “a broad-based fixed-income asset bubble.”
Sign In or Register to comment.