Central Bank Sponsored Madness: Inversions On Negative-Yield Bonds

German bonds are inverted in 19 places despite the fact that the German bonds have a negative yield for 13 years.

This Tweet by Holger Zschaepitz, author of 'Schulden ohne Sühne?' a book on states' addictiveness to debt caught my eye.

Good morning from #Germany, where the bond market is sounding the RECESSION alarm. Bund Yield Curve partly INVERTED w/ 3y Bund yields at -0.67% vs 1y yield at -0.58%. Yields NEGATIVE out to 13yrs. pic.twitter.com/F4Lgx6xNfH

— Holger Zschaepitz (@Schuldensuehner) May 30, 2019

Zschaepitz's Tweet inspired my lead chart.

The chart shows Germany's negative-yield bond market is inverted in 19 places.

The longer you borrow, the more money you collect because the ECB pays you to borrow.

On the 3-year bond, the ECB pays you 0.667% per year to borrow. If you borrow money for 3 months you collect an annualized 0.514% for borrowing.

This perversion could not possibly happen in a free market. It is best viewed as central bank sponsored madness.