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Debbiebegood

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UK 10 year yield has been falling from 3% last uear and now fell to 2.42%

Why is this considering that they allegedly stopped QE,etc.? As usual,self contradicting statements from the Gov. , BOE,...

Of course, some back door buying bonds buying with virtual funds backed by the taxpayer

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Why is this considering that they allegedly stopped QE,etc.?

Because those buying have access to information we don't and I am sure Obummer blowing the $hit out of the middle east again won't help things. But then buyers couldn't have know about that in advance could they?

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UK 10 year yield has been falling from 3% last uear and now fell to 2.42%

Why is this considering that they allegedly stopped QE,etc.? As usual,self contradicting statements from the Gov. , BOE,...

Of course, some back door buying bonds buying with virtual funds backed by the taxpayer

Half of the move (35 of the 65 bps) is inflation expectations; 10 year breakeven (inflation linked bond CPI breakeven) is now 2.78% vs. 3.15%.

Some is yield carry ; since german bunds now at 100bps! (and you take Euro risk for that, eek). Biggest spread of UK over Germany since mid nineties. What would you rather buy British paper at 2.5% or German at 1%?

Some is flight to safety; equity markets have rolled horribly in the last few weeks.

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Been watching since last year, as it were.n Most hated asset class coming into 2014. Was long into 2014 and longer February.

See Financial markets section 'If anyone interested?'

as well as Fave Charts

Inflationary? Behave. #turningjapanese

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OP was about Guilts not Bunds.

Bunds are in a delfationary, pre QE twilight zone and are now un-analysable as your nice article points out!

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Yes - and as you rightly pointed out in your own post, there are inter relationships.

If bunds go down due to a 'pre QE twilight zone', that will inevitably press down on Gilts to my mind

The over-arching point is the biggest driver of yield compression ion the UK 10 year is UK inflation expectations moving down.

This clearly undermines the idea that we will see that much coveted interest rate rise soon that so many on this form are (over) excited about!

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Publicly they have stopped QE however the BoE can operate in secret so we have no idea what they might be doing behind everyone's back.

Got to love secrecy in a capitalist system that's meant to be open and transparent.

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Italy and Spain 10year yields are very near UK's for quite some time.Obviously, despite all the official rhetoric, UK's economy is not that "succesful" compared to Spain and Italy, not to mention that they also do not have City of London's financial "talent" whose "financial service" should be cheaper for the UK than for other countries.

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UK 10 year yield has been falling from 3% last uear and now fell to 2.42%

Why is this considering that they allegedly stopped QE,etc.? As usual,self contradicting statements from the Gov. , BOE,...

Of course, some back door buying bonds buying with virtual funds backed by the taxpayer

My guess is markets factoring in collapsing aggregate demand, after the QE asset price fury experience, bubble 2.0, unbalanced for the gains of such held by a certain VI subgroups, winds down. There's nowhere particulary safe to go other than to many overvalued expensive asset classes, a few that may have more upside, but risk of significant correction too.

A heavy dose of stimulus during the US Great Depression (nothing like the levels to prevent correction this time) - despite modern mainstream history claiming money was too tight - that led to negative T-bill rates in 1933... did not prevent deflation. Do you accept low rates on UK Gilts or buy a house in the UK at these price levels?

- "The Federal Reserve policy of cheapening credit through the purchase of government bonds has been unable to make a dent in the conservatism of borrower or bank lender, in short, every anti-deflationary effort has yet to provide positive results"” (Editorial, Barron’s, July 11, 1932)
- In 1929, neither the Federal Reserve nor the Bank of England could overcome the worldwide forces making for contraction just by manipulating numbers of their balance sheets. Economic historian Joseph W.Davis put it this way.

... A careful reading of a mass of contemporary literature and an analysis of economic and financial developments in 1930 yield little or no support for the views that [a] Federal Reserve policy in that year was open to serious criticism, or that flooding of the money supply by the Federal Reserve System would have effectively checked the contraction or moderated the current and ensuing collapse. With enterprise 'collapsed,' the forces making for contraction were too strong to be overcome by the stimulus of artificially reducing short-term money rates below the very low levels actually reached.

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US Junk bonds? i am reading that US junk bond bond markets are experiencing record outflows. Suppose they are at the edge of the risk weighted assets... A trend ?

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FreeTrader's comment from the main gilt thread which is possibly applicable here.

It was certainly a good call that the ten-year rate would decline again, but we're some way above 2.5% at present.

This is the old problem that we've encountered throughout this thread - the fact that the 10-year reference gilt is actually constantly shortening in maturity until we switch to the new reference gilt.

The present 10-year benchmark actually matures 7 Sep 2023, so we're only a month away from it being a 9-year gilt.

The BoE currently has the 'true' 10-year yield at 2.66%.

A chart perhaps explains it best:

TrueYieldVsBenchmark.gif

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What does this all me - dummies language please? Is it good or bad... and by good or bad I mean is it because there is another economic crisis on the horizon...?

I no longer know whether good news is bad or vice versa.

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What does this all me - dummies language please? Is it good or bad... and by good or bad I mean is it because there is another economic crisis on the horizon...?

I no longer know whether good news is bad or vice versa.

The bad news is good news for them that want to profit from the money printing.

The good news is bad news as it might mean no more fee money.

The bad news is the good news wont last forever.

Is that news to you ?

Edited by TheCountOfNowhere

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The bad news is good news for them that want to profit from the money printing.

The good news is bad news as it might mean no more fee money.

The bad news is the good news wont last forever.

Is that news to you ?

It is stuff like that which ends up in people going nuts in MacDonalds*

Edit:

* Or any other fast food outlet brand.

:)

Edited by The Masked Tulip

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It is stuff like that which ends up in people going nuts in MacDonalds*

Edit:

* Or any other fast food outlet brand.

:)

:lol::lol::lol:

Don't worry TMT. we're the only two sane ones left.

:lol::lol::lol:

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Yes, denninger has been getting more cryptic and worrying recently. Apparently his musings led many to save a lot of funds back in 08, maybe worth paying attention again. I don't know, I didn't know of his site till 2010 or so. For sure the £ has lost some ground to the $ recently, suggesting that like junk bonds selling off, there is once again a flight to safety.

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Yes, denninger has been getting more cryptic and worrying recently. Apparently his musings led many to save a lot of funds back in 08, maybe worth paying attention again. I don't know, I didn't know of his site till 2010 or so. For sure the £ has lost some ground to the $ recently, suggesting that like junk bonds selling off, there is once again a flight to safety.

BTL?

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TBAC just announced that the Treasury won't need to sell ~$50bn in Cash Management Bills this August - the Treasury is reviewing its cash management operations, apparently. That has the potential to be bullish for stocks in August and September. In effect, it's $50bn the primary dealers and their affiliates can use to play the markets with that they wouldn't otherwise have had.

Colour me surprised! Just as we get some decent downside momentum the Krugmanite b@stards flood the market with free cash again! Risk on, people. <_<

Edited by zugzwang

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US Junk bonds? i am reading that US junk bond bond markets are experiencing record outflows. Suppose they are at the edge of the risk weighted assets... A trend ?

Yes, record outflows from HYG but not TLT

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