VIDEO - Alan Greenspan says it's 'only a matter of time' before negative rates spread to the US

UP NEXT

• 

  The more Trump tweets the more stocks fall, research shows

  New research by Bank of America Merrill Lynch shows that the more President Trump tweets, the more it affects the market. Veuer’s Taisha Henry has the story

  Veuer
• 

  Michigan becomes first state to ban flavored e-cigarettes

  Michigan is the first state to ban flavored e- cigarettes. The governor said that the ban is meant to protect young people from the potentially harmful effects of vaping. The ban, which covers retail and online sales, goes into effect immediately, but businesses have 30 days to comply. It does not apply to tobacco-flavored e-cigarettes.

  CBS News
• 

  13 sneaky ways Amazon gets you to spend more money

  Amazon completely dominated the e-commerce market last year, making roughly $283 billion. With the perks of Amazon's services, it can be hard to pass up free speedy, if not same day, delivery. The average Amazon Prime member is reported to spend around $1,400 per year, while non-members spend $600.

  Business Insider

UP NEXT

It will not be long before the spread of negative interest rates reaches the U.S., former Federal Reserve Chairman Alan Greenspan said.

“You’re seeing it pretty much throughout the world. It’s only a matter of time before it’s more in the United States,” Greenspan told CNBC’s “Squawk on the Street” on Wednesday, adding investors should watch the 30-year Treasury yield.

The 30-year U.S. rate traded at 1.95% midday Wednesday. It reached an all-time low last week.

There are currently more than $16 trillion in negative-yielding debt instruments around the world as central banks try to ease monetary conditions to sustain the global economy. The 10-year sovereign bonds in Belgium, Germany, France and Japan — among others — are trading with a negative rate.

U.S. Treasury yields are still well within positive territory but the Fed has already cut rates once and is expected to ease later this month. Market expectations for a rate cut in September are at 92.7%, according to the CME Group's FedWatch tool.

An aging population is driving demand for bonds, pushing their yields lower, Greenspan said.

“We’re so used to the idea that we don’t have negative interest rates, but if you get a significant change in the attitude of the population, they look for coupon,” Greenspan said. “As a result of that, there’s a tendency to disregard the fact that that has an effect in the net interest rate that they receive.”

He added that gold prices have been surging recently because people are looking for “hard” assets they know are going to have value down the road as the population ages. Gold futures are up more than 21% in 2019 and are trading around levels not seen since 2013.

Greenspan’s comments come after New York Fed President John Williams called low inflation the “problem of this era” in a speech earlier in the day.