Jump to content
House Price Crash Forum
Sign in to follow this  
cashinmattress

Rising Us Bond Yields May Spark Credit Crisis Ii

Recommended Posts

Rising US bond yields may spark Credit Crisis II

The global financial crisis may morph into a second, equally virulent phase where borrowing costs rise again, hobbling an embryonic economic recovery, debilitating cash-strapped banks, and punishing investors all over again.

Early warnings signs of this scenario include surging government bond yields, a slumping U.S. dollar, and the fading of the bear market rally in U.S. stocks.

Optimists hope that a fragile two-month rally in world stock markets, a rise in U.S. Treasury yields from record lows during the depths of the crisis in late 2008, and some less scary economic data all signal that a recovery is around the corner.

But gloomy analysts insist that thinking is delusional.

Once Credit Crisis Version 2.0 ramps up, foreign investors may punish the U.S. government for borrowing trillions of dollars too much by refusing to buy its debt until bond prices plunge to much cheaper levels.

The telling harbinger is benchmark Treasury note yields' surge to six-month highs around 3.75 percent this week, as investors began to balk at the record U.S. government borrowing requirement this year.

The U.S. Treasury plans to sell about $2 trillion (1.2 billion pounds) in new debt this year to fund a $1.8 trillion fiscal deficit.

Heavy selling of U.S. dollar-denominated assets could trigger a full-blown currency crisis and usher in surging inflation, forcing mortgage rates and corporate bond yields up, undermining any rebound in economic activity

Green shoots my ass.

Oh well, got gold?

HPC Gilts failure thread

Edited by cashinmattress

Share this post


Link to post
Share on other sites

last week the surge in 10 year Treasury yields was being talked about as looming armageddon

but today's big surge is being widely trumpeted as good news on the grounds that it means the recession is over as investors no longer want the secuirty of Treasuries

confused

Interest rates surged in the credit markets Monday as economic worries eased and investors dumped U.S. government debt for riskier investments like stocks and commodities.

The jump in rates, which accompanied a plunge in Treasury prices, was mixed news. Falling demand for the safe-haven investments is a welcome sign that investors are setting aside some of their worries about the economy

http://www.realclearmarkets.com/news/ap/fi..._treasurys.html

Edited by newdman

Share this post


Link to post
Share on other sites
last week the surge in 10 year Treasury yields was being talked about as looming armageddon

but today's big surge is being widely trumpeted as good news on the grounds that it means the recession is over as investors no longer want the secuirty of Treasuries

confused

http://www.realclearmarkets.com/news/ap/fi..._treasurys.html

when youve read it in the papers, the reason for any market move has long gone.

Share this post


Link to post
Share on other sites
last week the surge in 10 year Treasury yields was being talked about as looming armageddon

but today's big surge is being widely trumpeted as good news on the grounds that it means the recession is over as investors no longer want the secuirty of Treasuries

confused

http://www.realclearmarkets.com/news/ap/fi..._treasurys.html

Well this was how Bloomberg reported it last week as bad then yesterday they reported it as good. Have you not wondered why the good news has been so good and the bad news has been good as well all round the World since they had the G20 meeting?

They have taken the view if they can get the consumer spending again by convincing them that the worst is over the economy will logically recover. In principal the market "rally" that has been put in place has significantly increased US consumer confidence when coupled with lots of good news stories but it is more likely to offer stability for a few month than rebalance the economy in the way it needs to be.

Share this post


Link to post
Share on other sites
Well this was how Bloomberg reported it last week as bad then yesterday they reported it as good. Have you not wondered why the good news has been so good and the bad news has been good as well all round the World since they had the G20 meeting?

They have taken the view if they can get the consumer spending again by convincing them that the worst is over the economy will logically recover. In principal the market "rally" that has been put in place has significantly increased US consumer confidence when coupled with lots of good news stories but it is more likely to offer stability for a few month than rebalance the economy in the way it needs to be.

Bipolarism,medication required, lots of it.

Share this post


Link to post
Share on other sites

Stocks and bonds fell together last week

Stocks rose as bonds fell this week

That's the difference

But it points to a much bigger problem, from which there appears to be no pain-free escape

If bonds fall because investors believe the economy is recovering, borrowing costs will still go up. And this will drive the next leg down for US and UK overleveraged consumers, homeowners and companies. An increase in borrowing costs will particularly hurt those economies that are hugely in debt and rely on credit-fuelled consumption or debt creation (aka the finance industry) for economic growth. Whoops!

The only pain-free escape is for stocks and bonds to rise together. Is there any way this could happen?

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   288 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.