Bonds – rates have almost doubled

26th February 2018
-IAM, News

Christophe Rusconi, Head of Trading IAM

Since summer 2016 interest rates of government bonds show an impressive progression. These have almost doubled for Swiss confederation bonds and have even more on German and US government bonds. Bonds pay again an interest, everything is hence good again?!

Sadly, you will have guessed, despite these multiples, the bond market continues to pay returns in Europe, which can be qualified as “miserable”. Swiss confederation bonds over 5 years are still in negative territory at -0.40% and German sovereign debt delivers a return of -0.10% over the same period.

Finding decent returns with the cantons is not possible: fixed income securities of the canton of Geneva provides with a “generous” 0.40% for an average duration of 10 years.

You will have understood: we need to remain patient until bonds become again an asset class delivering a return able to support our social security system.