Even when the world eventually recovers from lockdown, financial repression will remain a dominant feature of developed-market economies. While markets are immediately focused on how and when economies can escape lockdown, the structural shift towards financial repression continues in the background. Signs of this shift are highly visible in Europe. Austria for example sold a 0.85% 2120 bond (its third 100-year issue) with a re-offer yield of just 0.88% and an order book nearly 9x larger than the issue size. The enormous order books for European government bond syndications this year reflects the insatiable appetite for low yielding European debt (a feature of financial repression). Taking the largest syndications where order books were at least €40bn, the average order-issue ratio was 7.7x and the average yield of these securities was just 1.13%.

Source: Bloomberg, Macrobond and Variant Perception