Saturday, Oct 03, 2015

US 1 & 3 month bonds go negative

UK.Investing: U.S. 1-Month Bond Yield Overview

With 1 month US bonds confidently negative, 3 month bonds a yo-yo ing from negative to positive, pivoting around zero and the yield on 6-month treasuries actually declined 19 basis point in past month. "None of this "should be happening" in a rising rate environment with an allegedly strengthening economy" with this indicative of coming recessionary conditions states Mike Shedlock: : Though Mike ignores that there is a global economy at stake, and this represents capital flowing into the US market, possibly from China and Europe, but also places like Brazil, combined with the US experiencing a global deflationary shock on commodities from the Chinese collapse that outweighs strong economic growth on the FOREX market right now.

Posted by libertas @ 10:33 AM (5089 views)
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1. libertas said...

Just more evidence that rates are just as likely to fall as they are to rise, with zero being an arbitrary figure, and we could yet see British rates fall to stem a wave of hot money flooding into Sterling, with the "refugee" wave being part of that trend, where economic migrants are following the money, with large financial institutions taking similar positions.

Saturday, October 3, 2015 09:35AM Report Comment

2. libertas said...

Rates on the long end for UK Gilts are turning down also. Look for much cheaper 5 and 10yr fixes over the next 12 months. But they will still not compete with variable rates for a while.

Swiss 10yr notes are heading to a new all time low, showing capital flowing out of the Eurozone to Switzerland.

Russian involvement in the Middle East with potential long term flare up with France bombing there also, probably is sending capital from Europe to USA as occurred during the World Wars.

Danish bonds are not falling however, suggesting that their currency peg is safe, and I expect it to break before and if the Eurozone is to collapse, but the Euro Dollar chart is showing sign that a correction is due before that, with €1.20 being likely in the short term, leading to panic devaluation.

Saturday, October 3, 2015 11:49AM Report Comment

3. mister ed said...

Oh dear...

I had that Nick Leeson in the back of the cab once.

Saturday, October 3, 2015 01:06PM Report Comment

4. taffee said...

Nick leeson was down £250 mill when he fled barings went burst for £850 mill as market shafted rest of the trades.

They said they would put things in place so it could never happen again

They certainly did...they ensured it would never happen on such a small scale site over again!

Saturday, October 3, 2015 02:16PM Report Comment

5. taffee said...

Meant such a small scale ever again!

Saturday, October 3, 2015 02:17PM Report Comment

6. libertas said...

Wait, you all said I was stupid about negative rates and that US rates are going up. US rates go negative now, and like children, you start changing the subject. Like, you thought the market would crash due to rates going up, following the central bank propaganda and fanestream media parroting as if you ever had an independent thought of your own.

Saturday, October 3, 2015 02:36PM Report Comment

7. mister ed said...

I think you're missing the point.

Saturday, October 3, 2015 07:43PM Report Comment

8. libertas said...

Mister Ed. What exactly is your point? I clearly missed yours, since you didn't state one.

Saturday, October 3, 2015 07:58PM Report Comment

9. icarus said...

@6 - not 'all' of us forecast a rise in central-bank, short-term IRs. Most of the signs are for rates staying down. These include low long-term rates (forward rates, term premia), private sector deleveraging, low investment in the real economy leading to low growth in output/productivity and little wage pressure on inflation etc. Plus all the 'unknown unknowns' of the effects of rate hikes on financial volatility and asset-price bubbles that move from asset class to asset class and continent to continent.

Given investment in financial assets has taken over from investment in the real economy we have a situation in which there isn't enough income to pay off the debt, since excess liquidity resulting from QE/ZIRP means not only more 'investment' in financial assets and asset-price inflation but also more debt, but without the output, productivity and wages to pay it down. Problem is that more 'free money' will exacerbate this contradiction.

Then there are currency wars. As each country competes for a slice of a stagnant export pie it uses QE/ZIRP to lower its currency and boost its exports (although there are complications regarding corporations, especially US ones, operating offshore).

PS - If 'hot money' is flowing into Sterling, thus causing the latter to reduce rates to stem this flow (@1), why doesn't the Eurozone, from which much of this money is flowing (@2), hike rates to stem the flow? Russian bombing in Syria (@2)? Isn't it a bit soon to say this is affecting inter-continental capital flows - especially since Russian 'entanglement' is unlikely?

Sunday, October 4, 2015 10:27AM Report Comment

10. quiet guy said...

"Wait, you all said I was stupid about negative rates and that US rates are going up. US rates go negative now, and like children ..."

Please calm down. US and UK interest rates have not changed in years. You have made a case that rates could go lower but it has not happened yet.

Sunday, October 4, 2015 11:40AM Report Comment

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