Government bond yields in Japan turned negative in the last trading day of the year, marking their lowest level since September 2017 and marking the extremes to which investors are currently avoiding “risky” assets, such as stocks. Negative 10-year bond yields mean investors are lending the government money only to be paid back less after a decade is over (for those curious why anyone would do this, consider that holding millions or billions of dollars in cash is not at all practical and so investors are forced to accept this negative return). The negative yields are also a sign of the growing unease over the strength of the global economy. While not to the extreme level of Japan government bonds, U.S. bond yields have also moved lower over the last several months, signaling that investors are adopting a more cautious economic outlook moving forward.

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