A 5-year bond now has a lower yield than a 3-year bond? How is that even possible? Wouldn't anyone who wants a 5-year bond just buy a 3-year bond and then put the cash under their mattress after 3 years?
Is the idea that in 3 years' time, negative interest rates will be widespread, physical cash will be abolished, and figuratively keeping the cash under your mattress isn't even possible?
EDIT: And why don't arbitrageurs buy up 3-year bonds and sell 5-year bonds?
A 5-year bond now has a lower yield than a 3-year bond? How is that even possible? Wouldn't anyone who wants a 5-year bond just buy a 3-year bond and then put the cash under their mattress after 3 years?
Is the idea that in 3 years' time, negative interest rates will be widespread, physical cash will be abolished, and figuratively keeping the cash under your mattress isn't even possible?
EDIT: And why don't arbitrageurs buy up 3-year bonds and sell 5-year bonds?