The average yield on German government bonds has fallen below zero for the first time as the phenomenon of negative interest rates intensifies across global financial markets.

So-called "umlaufrendite" – the average rate across outstanding bonds published once a day by Germany's Bundesbank – hit a new low yesterday of minus 0.02 per cent, going beyond its previous low of zero reached in April.

The milestone was passed as the European Central Bank’s purchases of bonds have pushed prices higher and driven yields deeper into negative territory.

Until the economy moves into a new phase where the recovery looks more robust, the world of negative yields bonds will expand, said James McCann, an economist at Standard Life. – (Copyright Financial Times Service 2016)