Long-term interest rates have been low since the subprime crisis. Analysts at Natixis look at the three mechanisms that keep long-term interest rates low.

Why are long-term interest rates low?

“Risky asset prices are very high, which reinforces the need to buy risk-free bonds to stabilise the level of portfolio risk.”

“Investors are buying more and more illiquid assets, which they can offset by also holding more liquid government bonds.”

“As public debt ratios are high, there is strong pressure on central banks not to allow long-term interest rates to rise, which is what investors expect.”