flix on Nostr: 🇪🇸 SPAIN Inflation 3% 10y Govt Bond yield 3.48% People are lending money to the ...
🇪🇸 SPAIN
Inflation 3%
10y Govt Bond yield 3.48%
People are lending money to the govt for 10 years for a meager 0.48% real yield.
Of course real inflation is higher than CPI. If you look at housing or any other asset you quickly go above 6%.
So you are guaranteed to lose purchasing power, even if everything goes well. You are paying for the privilege of lending the govt money!
And of course that is not counting the risk of default. Spain historically defaults, reestructures or devalues AT LEAST once every 30 years.
So a 10yr bond has a 33% of not being paid in full!
Is that risk being compensated by the yield? Not even a little.
Inflation 3%
10y Govt Bond yield 3.48%
People are lending money to the govt for 10 years for a meager 0.48% real yield.
Of course real inflation is higher than CPI. If you look at housing or any other asset you quickly go above 6%.
So you are guaranteed to lose purchasing power, even if everything goes well. You are paying for the privilege of lending the govt money!
And of course that is not counting the risk of default. Spain historically defaults, reestructures or devalues AT LEAST once every 30 years.
So a 10yr bond has a 33% of not being paid in full!
Is that risk being compensated by the yield? Not even a little.