How To "Value" Sovereign Bonds In 2 Words: US 'Friend' Or 'Foe'

Tyler Durden's picture

Submitted by Chris Hamilton,

What do Sovereign bond interest rates represent???

If I knew nothing about the growth, the debt, the inflation, the exporters vs. importers, the serial defaulters, currency manipulators, hot-money or conversely deflation fighters, etc. etc. and simply grouped the nations of the world by interest rates paid on 1yr and 10yr sovereign debt…well I’d get a funny feeling the rates paid have a stronger correlation to the relationship of the nations to the US than any other variable.  I’d wonder if your status with the central bank cabal was more important than your ability to repay the loaned money?  Luckily I know better!

Some very notable rates…

  • PIIGS are amazing and now thanks to the EU’s LTRO are dirt cheap…(PIIGS 1yr / 10yr yields)= Portugal 0.05% / 3.75% , Ireland 0.12% / 2.18%, Italy 0.27% / 2.74%, Greece 2% / 6.3%, Spain 0.13% / 2.50%...Serial defaulters need not pay more for lending ever again!?!
  • Italy with the world’s 3rd largest aggregate debt, no growth, and no enforceable tax laws have blended rates that are ludicrous and indicative of institutional fraud…in fact, that can be said of nearly all these rates.
  • Australia and New Zealand are the only “outliers” paying up on yields and generally sitting in the wrong classifications.

1 yr interest rates

US Pals and/or “deflation-istas”:

Belgium 0.02%, France 0.024%, Netherlands 0.03%, Germany 0.036%, Switzerland 0.05%, Japan 0.055%, Czech Rep 0.09%, US 0.09%, Ireland 0.12%, Spain 0.13%, Hong Kong 0.14%, Sweden 0.25% Denmark 0.25%, Italy 0.27%, Latvia/Lithuania 0.3%, Singapore .0.35%, UK 0.41%, Portugal 0.5%, Israel 0.53%, Taiwan 0.6%, Austria 0.7%, Qatar 0.7%, Canada 1%, Saudi Arabia 1%, Bulgaria 1.26%, Norway 1.33%,

US “fence sitters”:

Hungary 1.98%, Greece 2%, Philippines 2.07%, Thailand 2.14%, Poland 2.31%, S. Korea 2.37%, Australia 2.5%

US naughty list and/or importers of US inflation:

Mexico 3%, Chile 3.1%, Malaysia 3.3%, China 3.74%, New Zealand 3.9%, Vietnam 4.6%, Colombia 5%, Iceland 5%, S. Africa 6%, Sri Lanka 6.4%, Indonesia 7.25%, Russia 8.6%, India 8.7%, Venezuela 9.7%, Turkey 9.75%, Pakistan 10.1%, Kenya 10.27%, Brazil 11.2%, Egypt 12.2%, Argentina ???, Ukraine 20%

10 yr interest rate

US Buds and/or “deflation-istas”:

Switzerland 0.44%, Japan 0.51%, Germany 1.06%, Finland 1.23%, Netherlands 1.26%, Austria 1.34%, Denmark 1.42%, Czech Rep 1.45%, France 1.46%, Belgium 1.47%, Taiwan 1.59%, Sweden 1.62%, Hong Kong 2.02%, Canada 2.09%, Ireland 2.18%, Norway 2.35%, Singapore 2.38%, US 2.43%, UK 2.49%, Spain 2.50%, Latvia/Lithuania 2.6%, Israel 2.72%, Italy 2.74%, Qatar 3.04%,  S. Korea 3.06%, Poland 3.37%, Australia 3.40%, Portugal 3.75%

US “fence sitters”:

Thailand 3.4%, Bulgaria 3.5%, Malaysia 3.89%, New Zealand 4.2%, Philippines 4.33%

US “haters” and/or importers of US inflation:

Chile 4.24%, China 4.3%, Hungary 5.07%, Peru 5.2%, Mexico 5.71%, Greece 6.3%, Colombia 6.66%, Iceland 7.28%, Sri Lanka 7.5%, S. Africa 8.14%, Vietnam 8.21%, Indonesia 8.25%, India 8.85%, Argentina 9%?, Turkey 9.32%, Russia 9.38%, Venezuela 11.7%, Brazil 11.97%, Kenya 12.1%, Pakistan 13.2%, Egypt 15.9%

*  *  *

Extra credit:

1 mo interest rates

Germany  <-0.025%>, Switzerland <-0.015%>, France 0.008%, US 0.03% (US was 5.22% in Feb ’07), UK 0.031%, Russia 9.55% - but these rates are only for central banker pals worldwide…

Consumer Rates

While consumer rates in America for non-bankers are a little higher…

  • Credit card rates are a minimum of 10.5% easily up to 30%
  • Auto loan (60mo, new car) @ 3.2%
  • Mortgage (30yr fix) @ 4.3%
  • Stafford student loan @ 4.66%

And poor, poor savers…not quite keeping up with inflation (somewhere between 2% and the Fed you can pick the rate that suits you best)...

  • 1yr CD @ 0.6%
  • Savings accounts @ 0.1% - 0.3%

So does that mean that US savers and credit card spenders are 'friend' or 'foe'?


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Slave's picture

What a sky high fucking SHITPILE.

Stackers's picture

Credit cards are the evil of all evil. Zero backed plastic counterfeiting machines that charge you double digit compounding interest on the money they create out of thin air every time you use it.

Angry Plant's picture

And now you see why the banksters were able to win the war for Ukriane.

Don't worry though im sure any day now countries will wake up and throw off there low interest rate chains of enslavemnt and embace the freedom of 10% rates.

NOTaREALmerican's picture

Huh,  interesting article.   

ebworthen's picture

The Federal Reserve:  punishing Patriots, Pensioners, and We The People since 1913.

Snoopy the Economist's picture

This likely means that US treasury bonds are going higher - why would anyone give their money to Spain for 2.5% when US bonds are 2.43%? That is until the whole shitstorm blows up and all the rates go sky high where they belong.

Yen Cross's picture

  Hey Snoopy, I wonder what the risk premium on a (120 day) OTM <>Call   Spanish/Japan (2 year note) spread is?

  You know Spain is going down before Japan brotha... ;-)  We can call it the, 3X- Armageddon ETF

Snoopy the Economist's picture

Yen, you are probably right but Japan already looks like the walking dead (Fuku, demographics, QE, Q2 GDP -6.8%, etc.); then again those zombies walk until shot in the head.

Herdee's picture

CreditCards rip-off businesses.eom

BlackVoid's picture

I am not a bit surprised. Nothing odd here though, the US is a global bully.

litemine's picture

The USA needs to get Spanked, then through the tears maybe, the people will see the truth. how was most of the QE given to the Elite, bankers and bonuses? how was freedoms given up to Israel how is secrets given up to Israel? lobbying thru Congress...... for personal profits.......nail Guns required to save what is left of America........Those in positions of trust that abused our Trust need to get yanked from their perch.