Monday , April 22 2019
Home / Global Macro Monitor / What Is The Message Of The Bond Market? Nuttin’!

What Is The Message Of The Bond Market? Nuttin’!

Summary:
Check this out. The Greek 5-year now trading through the U.S. 5-year yield.   Absurd. Italian 10-years now through the U.S., Portugal 10-year is trading 140 bps through the U.S.?   WTF? We laugh when the Flat Earth Yield Curve Society asks, “what are the bond markets telling us?” Nuttin’, honey. Global bond markets are distorted and suffer sovereign yield scarcity due to global central banks becoming the largest buyers.   Foreign central banks and the Federal Reserve now own/hold almost 50 percent of the outstanding U.S. marketable notes and bonds.   This is the “quantum mechanics” of the new bond market, folks.   The underlying reality of markets are not the same as we used to understand them. All Markets Are Distorted – Beware Of Reflexivity If the risk-free interest rate

Topics:
Gregor Samsa considers the following as important:

This could be interesting, too:

oldprof writes Weighing the Week Ahead: Why is the Market so Quiet?

James Picerno writes Book Bits | 20 April 2019

James Picerno writes Deep-Value ETF Report: Commodities Remain Deep In The Hole

James Picerno writes Macro Briefing: 19 April 2019

Check this out.

The Greek 5-year now trading through the U.S. 5-year yield.   Absurd.

Italian 10-years now through the U.S., Portugal 10-year is trading 140 bps through the U.S.?   WTF?

What Is The Message Of The Bond Market? Nuttin’!

We laugh when the Flat Earth Yield Curve Society asks, “what are the bond markets telling us?”

What Is The Message Of The Bond Market? Nuttin’!

Nuttin’, honey.

Global bond markets are distorted and suffer sovereign yield scarcity due to global central banks becoming the largest buyers.   Foreign central banks and the Federal Reserve now own/hold almost 50 percent of the outstanding U.S. marketable notes and bonds.   This is the “quantum mechanics” of the new bond market, folks.   The underlying reality of markets are not the same as we used to understand them.

What Is The Message Of The Bond Market? Nuttin’!

All Markets Are Distorted – Beware Of Reflexivity

If the risk-free interest rate is distorted, then all assets are mispriced.

Moreover, given the increasing feedback between markets and the economy, it is not inconceivable the Flat Earth Yield Curve Society fails to discount the distortions and convinces itself and the real economy the yield curve is signaling an imminent recession.  Capital investment and consumers then run for cover and it’s game on — a self-fulfilling recession.  Soros’ Reflexivity on steroids.

Of course, a recession is going to come someday but who knows when, and we sure wouldn’t trust the distorted bond market to tell us anything about anything.

Don’t make the mistake that one prominent market strategist made when central banks were scooping up sovereigns faster than my 12-year daughter used to do with ice cream at 31 Flavors,

We’re in a depression. That is what the bond market is telling us.  GMM, September 2010

Someday this will end ugly.

Gregor Samsa
This site is designed as a “go to” source for traders, investors, policymakers and any interested in markets and the global economy. We provide informed opinion, timely market information, sources, and links.

Leave a Reply

Your email address will not be published. Required fields are marked *