In a new report, HSBC analyst Steven Major addressed growing speculation that more global central banks, including the U.S. Federal Reserve, will opt for increasingly negative interest rates to combat deflation. According to Major, negative interest rates may also be a long-term solution to global debt issues as well.

The bond market isn’t anticipating much lower rates in the G4 within the next year. However, with five central banks now implementing negative rates and the U.S. Fed suggesting that it could turn to negative rates in extreme economic conditions, negative rates may no longer be considered a radical option.

In fact, Major argues negative rates could kill two birds with one stone. In addition to combating deflation, they could also address one of the underlying causes of weak global growth: debt.

“NIRP helps deliver a negative real rate and, while normal coupons may be bound at zero, negative yields reduce debt over time by haircutting the bondholder at redemption,” he explained.

HSBC is…

Click here to continue reading

Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!