For those of you who view negative interest rates on sovereign debt as a tax, there is good news. For those of you who want to use sovereign debt as a means of building wealth rather than just parking assets for safety, there is good news. Sadly, the news is just still far short of wonderful.

According to Fitch Ratings, the negative yields in sovereign debt have continued to contract. The total tally around the globe with negative yielding sovereign debt fell to $10.4 trillion as of November 1, 2016. That had been over $11 trillion in the summer, and this new figure also compares to a rate of $10.9 trillion on September 12.

Fitch showed that the recent rise in eurozone bond yields and a modest dollar appreciation since September have contributed to make this $10.4 trillion the lowest level of negative yields in sovereign debt since the end of May.

Before celebrating too much here, Fitch went on to warn that the persistence of low and negative yielding debt globally will continue to take its toll on investors. The agency sees this as being particularly the case for buy-and-hold investors, such as insurance companies.

Fitch said in its report:

As older, higher coupon bonds mature, income-oriented bond investors are forced to buy newer bonds that are being reissued with dramatically lower coupons. For example, a German sovereign bond with 30 years to original maturity recently matured on Sept. 20 with a coupon of 5.625%. That same bond issued on Nov. 1 would have a coupon of about 0.80% based on currently available yields. For investors that have not realized gains on bond prices, income generated by their portfolios will continue to diminish in an ultra-low rate environment.

For other bond investors, price sensitivity to changes in interest rates is exacerbated by the increasing stock of low-coupon debt. All else being equal, duration, and thus price sensitivity, is greater for lower coupon bonds.

The tally of negative yields outstanding in European sovereign debt was lower by about $450 billion. Italy was singled out for a lot of this drop, with a sharp decrease in outstanding negative yielding debt amid political concerns surrounding Prime Minister Renzi’s December referendum. Debt trading with negative yields in Italy fell to $340 billion from $480 billion since September 12, making Italy account for about $140 billion of that whole $450 billion in Europe.

Japan remains the largest negative yielding debt outstanding of any country, with a whopping $6.9 trillion outstanding. Fitch said of Japan:

Long-term yields have been mostly stable in Japan since September, following the Bank of Japan’s decision to target a near-zero percent yield for its 10-year government bond.

It likely will be quite some time before all negative yields are gone. This has been brutal for savers and for insurance and deposit institutions. At the same time, at least it acts as a cap on how much the compounding of interest can add to a nation’s total direct debt.

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