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Why are interest rates negative in many developed countries, what might turn the tide, and what are the implications for equity investors? Senior Research Analyst Greg Squires shares Causeway's view on negative interest rates.
For more on the subject, read our primer on Negative Interest Rates
- Supply and demand imbalances are contributing to the growing stock of negative yielding debt.
- Risk aversion, regulatory requirements, and expectations to profit as yields fall further are driving demand, while central bank balance sheet expansion is shrinking supply.
- An abatement of geopolitical risks and/or increased fiscal government spending could push rates higher.
- We seek companies with higher barriers to entry and operational restructuring. A well-covered dividend yield is especially attractive in this negative yield environment.