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Dutch bonds just did something that we haven't seen in 499 years

Dutch bonds just did something that we haven't seen in 499 years
Stock Market2 min read

Dutch 10-year government bond yields dropped below zero for the first time ever on Monday, making them the latest to join the negative yield club.

The Netherlands' 10-year dipped by 0.08 percentage points to as low as -0.007%. It has fallen by about 30 basis points since the June Brexit vote.

There's roughly $13 trillion of global negative-yielding debt now, according to data from Bank of America Merrill Lynch, cited by the Wall Street Journal on Sunday. By comparison, there was about $11 trillion ahead of the UK's vote on EU referendum.

When a bond is negative yielding, it means investors get less back when the debt is due than what they pay for it today.

The Dutch bond yields are the lowest the country has ever seen. Amazingly, there's nearly half a millennium of records to compare that against, as record keeping began in 1517. As a historical reference point, that's the same year that Marin Luther published his 95 Theses.

You can see the history of the Dutch 10-year going back to 1517 in the chart below, which was shared by Deutsche Bank's Jim Reid in his Monday note to clients.

Screen Shot 2016 07 11 at 8.29.09 AM

Deutsche Bank

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