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The article is talking mostly about long term interest rates (on 10, 20, 30 yr government bonds). Those are set by the market, by a simple demand/supply mechanism on individual bond issues. Things like QE have some impact, but the impact is hard to gauge. The central banks normally determine only the short term interest rates (up to 3-6 months).

Note that even as QE is being slowly reversed in the United States and the short term interest rates have been raised - the 10yr, 20yr, 30yr treasury yields are still tanking like crazy. So it is not the fault of the central banks, which is the point of the article.

In short - people are buying bonds which eventually drives the yield below zero. There's no rule that says "a bond can only be sold at below the levels that the 0% yield implies", therefore brace yourself for the possibility of breaching this level. For any currency, including USD.




> The central banks normally determine only the short term interest rates (up to 3-6 months).

But if the short-term rates are manually set by central banks to be artificially low, wouldn't that be the primary driver behind negative long-term interest rates even if the exact number is determined by supply and demand? The article is talking about natural drivers like "negative time preference" which just sounds wrong.


Well 10yr or 20yr should still be above zero even if short term rates are kept around zero for an extended period of time. This is due to the cost of locking money in for a long period of time. What the article is trying to say by "negative time preference" is that this sound logic: "I'm giving you money for 20 years instead of lending money 80 times for 3 months each time; pay me more for that privilege" is disappearing in the market.




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