Extraordinarily low bond yields signal a grim economic outlook. But for governments, there is a silver lining. For a while at least, they can trim interest bills even as they ramp up borrowing.

A combination of near-zero official policy rates, central-bank bond purchases, investor aversion to risk and worries about the economic recovery have driven yields in countries such as the US, the UK and Germany to historic lows. In the US, the Treasury recently auctioned two-year notes at a yield of just less than 0.5%; in the UK, 10-year gilt yields have fallen below 3%; and in Germany, the 30-year bond yield has dropped to just 2.6%.