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chelston

Bond Market Is Following Shares Down , Danger Ahead

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The bond market has been falling in the U.S for the last 3 or 4 days, at the same time the stock market has been declining. Usually the bond, treasury's market will go up and shares go down or bonds go down and shares go up. This does not bode well, expect a crash in the stock market soon.

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I'm sure it has happened before, but generally in the past 6 months at least, we have seen the following.

Shares collapse, investors sell and flee for the safety of bonds. As a result the yields on bonds decrease due to demand.

When shares have rebounded, investors have sold their bonds and bought stocks. Bond yields have then risen as a result.

But last week, as the OP writes, as stocks fell, bond yields actually rose, suggesting investors were getting out of both stocks and bonds and heading for.... cash..... gold?

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I'm sure it has happened before, but generally in the past 6 months at least, we have seen the following.

Shares collapse, investors sell and flee for the safety of bonds. As a result the yields on bonds decrease due to demand.

When shares have rebounded, investors have sold their bonds and bought stocks. Bond yields have then risen as a result.

But last week, as the OP writes, as stocks fell, bond yields actually rose, suggesting investors were getting out of both stocks and bonds and heading for.... cash..... gold?

Doesn't this also imply Interest Rates will rise.

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Doesn't this also imply Interest Rates will rise.

Well they are still trying to get people to borrow and spend, rather than hoard and save. Even as bond yields have been decreasing, the fed has still been buying the long end of the curve to try and reduced mortgage rates further.

If the bond bubble bursts, the Fed may buy even more treasuries in order to try and bring down the yield curve to compensate.....

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They already are.

Isn't that the concern? Fed is buying bonds to reduce yields and yet the yield is still increasing suggesting large scale dumping by investors.

It looks to me that the game is over for the dollar.

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The market’s fear, of course, is that China would punish [the US] by buying fewer Treasuries in the 10-year sector,” said David Ader, strategist at RBS Greenwich Capital.

Rather than just not buying any more, I think the real fear is one they they might wake up one day and try to dump the whole lot, including any vast reserves of dollars they are holding. That would really be a disaster.

If they just stop buying more, then either Obama will have problems funding his stimulus or the fed will just buy the newly issued bonds themselves. Eventually leading to high inflation.

Edited by Ted

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I'm sure it has happened before, but generally in the past 6 months at least, we have seen the following.

Shares collapse, investors sell and flee for the safety of bonds. As a result the yields on bonds decrease due to demand.

When shares have rebounded, investors have sold their bonds and bought stocks. Bond yields have then risen as a result.

But last week, as the OP writes, as stocks fell, bond yields actually rose, suggesting investors were getting out of both stocks and bonds and heading for.... cash..... gold?

maybe they were front-running the BoE by bidding up corporate bonds, whilst selling gilts to benefit from the spread narrowing.

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The bond market has been falling in the U.S for the last 3 or 4 days, at the same time the stock market has been declining. Usually the bond, treasury's market will go up and shares go down or bonds go down and shares go up. This does not bode well, expect a crash in the stock market soon.

I should add that gold has also been going ballistic, which would be a good warning for those prepared to pay attention.

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I should add that gold has also been going ballistic, which would be a good warning for those prepared to pay attention.

I am sure that many peeps here do indeed pay attention, but few have the cash reserves to actually play the gold game..however lucrative (in retrospect) it might be.

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Guest vicmac64
The bond market has been falling in the U.S for the last 3 or 4 days, at the same time the stock market has been declining. Usually the bond, treasury's market will go up and shares go down or bonds go down and shares go up. This does not bode well, expect a crash in the stock market soon.

Like I said before the footsie will in my opinion go below 1000. This is the collapse of a corrupt financial system.

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Does anyone know of a good resource that will explain the basics of this so called 'bond bubble'? The term keeps cropping up but I'm unsure as to the potential implications that it may have.

Nope..but this might provide a giggle or two:

BondMinicar.jpg

post-14298-1232908955_thumb.jpg

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The bond market has been falling in the U.S for the last 3 or 4 days, at the same time the stock market has been declining.

A simple question... I glanced through some prices for sovereign debt in the Weekend FT yesterday - but it seems awfully low-tech to only be able to review these prices on dead-tree... there's no price history - and there seems to be significant selection going on with respect to maturity and coupon.

Is there something for the bond market similar to finance.google.com for stocks?

Edited by A.steve

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A simple question... I glanced through some prices for sovereign debt in the Weekend FT yesterday - but it seems awfully low-tech to only be able to review these prices on dead-tree... there's no price history - and there seems to be significant selection going on with respect to maturity and coupon.

Is there something for the bond market similar to finance.google.com for stocks?

How about this......?

http://stockcharts.com/charts/performance/USBonds.html

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this answer could be too simple.

Bond resale prices nearly always move in the opposite direction to interest rates. The base rate is currently near zero ..... so, can they fall? No. Will they rise oh yes. And when they rise bond prices will fall. I wonder if the market is simply recognising the reality that we are heading to 10% base rates sometime towards the end of this year or next.

It would be interesting to see a normalised plot of Dow, FTSE, interest rates and bond prices - anyone have the data?

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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