This weekend I bumped into a friend of mine who is a portfolio manager for a $150M mutual fund and we got to talking about the state of the world economy and the recent volatility.
In a nutshell his view is that the US is likely to join other developed nations in offering negative interest rates and that this may lead to some bad scenarios for the US and world. However, it's unclear how it will play out or when this may happen since we've never seen negative interest rates before.
What's happening with interest rates?
Interest rates have been falling across the world and there are now about $15 Trillion dollars worth of negative yielding bonds world wide. This represents about 30% of the government debt market and 15% of the total bond market.