Still, the MMT-friendly idea that many governments gripped by disinflation have ample capacity to spend is one signal investors can divine from markets right now. The stockpile of global bonds with below-zero yields sits near $14 trillion.
“In bonds with negative yields, you could argue that’s a signal there is too much demand for fixed income but also too little supply,” said Eric Stein, a money manager at Eaton Vance in Boston. “Germany should be issuing more debt; they should be having more fiscal spending.”
With Germany’s low debt, that’s one of the easier conclusions to draw. The bigger one -- that standard monetary models hold less water in today’s world -- is something bullish denizens of fixed income are also increasingly coming round to.
“MMT is printing money and buying real things. QE is printing money and buying surreal things,” said Richard McGuire, head of rates strategy at Rabobank. “Whatever the case, it’s always the time to buy safe-haven bonds.”
--With assistance from Ben Holland, Luke Kawa and Anooja Debnath.
This article was provided by Bloomberg News.