The Bond Bubble's Risk Hits an Unbelievable $555 TRILLION in Size

Phoenix Capital Research's picture

The next Crisis will be THE CRISIS.


You might have noticed that each successive crisis over the last 15 years has been both larger and involved more senior asset classes.


1.     The 2000 Tech Bubble involved stocks.


2.     The 2007 Housing Bubble involved housing.


3.     This crisis involves Bond… as in ALL bonds.


To give some perspective regarding size here consider that the credit default swap market based on housing that nearly took down the system in 2008 was $45 trillion at its peak in 2007.


In contrast, the global bond market is well over $100 trillion today.


And it’s growing rapidly.


Indeed, US corporates are on track to issue over $1.5 TRILLION in debt this year alone. Not only will this be an all time record… it will be the third consecutive all-time record for corporate debt issuance.


Part of the reason that the bond market has become so enormous is because few entities, particularly sovereign nations, have the cash handy to pay back debt holders when their debts come due.


As a result, many of them are choosing to roll over old debts OR pay them back via the issuance of new debt. The US did precisely this in the last few months issuing over $1 trillion to cover for the payment of old debt that was coming due.


So the bond bubble is not only over $100 trillion in size…it’s actually GROWING on a month-to-month basis.


Reading all of this is no doubt concerning. However, the situation becomes much worse when you consider that over 81% of ALL derivatives trades are based on interest rates (BONDS).


Globally, the interest rates derivative market is an unbelievable $555 TRILLION in size.

These are trades based on interest rates that in turn are based on the bond bubble. Thus, the significance of the bond bubble simply CANNOT be overstated. Banks and other financial entities have literally bet an amount equal to over SIX TIMES GLOBAL GDP on interest rates.


This is why Central Banks are absolutely terrified the moment a sovereign nation comes close to defaulting. Consider that Spain’s bond market is just $1 trillion. But the derivatives trade market based on Spain’s bonds is likely well north of 10X this amount.


With this kind of leverage, even if 4% of the trades are at risk and 10% of those trades go bust, you’ve wiped out the equity at more than a handful of the large EU banks.


In simple terms, the bond bubble is THE bubble. And when it bursts, we will experience THE crisis. In comparison, 2008 will look like a joke.


If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.


You can pick up a FREE copy at:


Best Regards

Phoenix Capital Research





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Ewtman's picture

The bubble will burst dramatically once the 10 YR yield takes off...


all-priced-in's picture

World debt levels don't matter -   because


we owe it to ourselves.





CHX's picture

They papered it up to 555T, what stops them from papering up to 666T, 999T, 1.8 Q, .... ?

Japan is already in full debt monetization mode but has yet to fully crumble after decades. Timing the inevitable collapse is a fools erand, the lunacy already went on longer than many thought it would or could. But it did. Yes, the end draws nearer. Will it be in 2015? 2020 or 2026? Only a few insiders might know, but I even doubt that. They let is run by all means available, for as long as thy can. The world already is in new, uncharted waters, it is foggy, the captain is drinking heavily behind the steering wheel going full speed, the crew is partying, the passengers asleep. The warning system has been destroyed. What could go possibly go wrong?

GreatUncle's picture

Well one day ... but for now.

If Uncle Sam in cahoots with Putin and Beijing created a nice space EM pulse weapon that fried all electronic circuitry here on earth then you get a partial reset.

Oh the quadrillion, dunno who was holding what? As WE LOST ALL THE DATA. Would be alot of turmoil but then you run round making the promise you will get what you are entitled too "honestly" because in their minds = 0. You could lie your rocks off about anything on what you said you were entitled too and what you had, this or that and NOBODY COULD REVEAL OTHERWISE.

Good disaster movie that.

Radical Marijuana's picture

Only a mad, macabre sense of humour may appreciate allowing private banks to make money out of nothing, so that they could speculate with it, to the point where the entire physical economy, and all the flesh and blood people, have become relatively trivial compared to those $quadrillions!

ihatebarkingdogs's picture

We CDS'ed some folks.

WTFUD's picture

It's been a magical day and we're on our way home.

silverer's picture

The printing press is starting to hum and smoke... won't be long now.

combatsnoopy's picture

The stock market is high because corporations are the biggest purchases of stock. Buying back their own stock supports or raises the share price, enabling executives and boards to sell their shares or cash in their options at a profitable price. The cash that Quantitative Easing has given to the mega-banks leaves ample room for speculating in stocks, thus pushing up the price despite the absence of fundamentals that would support a rising stock market.

hendrik1730's picture

Couldn't agree more. This will end VERY badly.

Hoagie Carmichael's picture

venkman I told you not to cross the streams

badger10's picture

Deflation is present. Commodity prices prove that! Lower oil prices help the consumer but kills the economy. Where is the growth to support these higher stock prices. Been waiting six years for the economy to expand!

CHX's picture

The real economy IS deflating, as the amount of money (debt) goes through the roof (inflation). Not so hard to understand really. The new money just has gone neither into the real economy (main street is paying for it by a lack of income due to ZIRP and negative real incomes, and a loss of purchasing power of their remaining dollars) nor the commodities. To the contrary, some of it has been used to hammer down commodities (naked paper shorting it). The inflation is in the bond and equity prices, in CEO salaries etc etc. Ultimately real money will rebalance everything, but as long as they can keep the paper gold scam up and control of the pricing mechansim, expect this madness to continue.

we built this city's picture

My friend - so far the only joke here are your predictions


markets at all time high- new record every day



The crisis will eventually come....biut you are shouting and screaming for over 2 years- while markets have skyrocketed and eliminated all shorts!

bunnyswanson's picture

Well, what do you want to talk about?  I think they are concerned about the guns in the hands of American because...i think it will be game over..either a FEMA camp and slavery or Sign Off at your own hand (right after you try to get revenge).

The International Banking Cartel (The Movie 1 hour)

In a comparison of the number of privately owned guns in 178 countries, the United States ranked at No. 14 In the United States, the number of rifles in civilian possession is reported to be 110,000,0002 The estimated total number of guns (both licit and illicit) held by civilians in the United States is 270,000,0001 to 310,000,0002

Radical Marijuana's picture

87 second video

as a metaphor:

Exploding iceberg in Antarctica!

Some Bloke's picture

Well just you wait till Phoenix Capital Research turns bearish....

steelrules's picture

Herbert Stein's Law,"If something cannot go on forever, it will stop,"

Kuldip's picture

I guess GS too are looking for an exit strategy.

CHX's picture

Its already implemented in their name... Nuff said.

arrowrod's picture

Is somebody coming to my house to collect?  Or, are they going to send me a bill from an anonymous PO Box.

flyonmywall's picture

Guess you gonna need 1 trillion % inflation to get rid of that problem.

Should be an easy fix for all the Ph.D. types working at the Treasury and Fed.

After all, they've done it before.

Got precious?



When the bond bubble bursts chaos will ensue and no amount of financial planning will suffice to keep the ATMs filled with cash and grocery stores stocked with food. Everything will be closed down and liquidated at the Great American Fire Sale unless the MIC plans on initiating World War Three as a last ditch attempt at subterfuge. In brief, the Russian Federation, China, and India will launch nukes at that juncture rendering all investments worthless when one cannot find a can of beans to eat in order to survive the fallout.


p.s. there is no life after bankruptcy, America.

DutchR's picture

Why not an Unbelievable $666 TRILLION*


*buy three and pay two, limited while in stock..

mccvilb's picture

A quadrillion here a quadrillion there. They're only zeroes. Their notional value is what counts, which by comparison is very small. So what if derivative bets gone bad bankrupted corporations and destroyed the mortgage market? Thanks to Dodd-Frank that could never happen again, right?

It already has by transferring control of the domestic liabilities of the derivatives of regulated US banks over to unregulated foreign corporations. Now the bankers want Uncle to pick up the tab in case it all goes south again.

wstrub's picture

No wonder there's pressure on gold..............the alternative (and no counter party risk) currency.

Colonel Klink's picture

That which cannot be paid, won't!  You don't own it if you don't HOLD it!  Paper promises don't count.

Meme Iamfurst's picture




And, when our great sun spits out the gamma rays as it did in the 1850's, no zeros or ones will exist...not even at the center of the earth, encased in 100 miles of lead.  Good bye computers, I-what-ever, anything and everything digital.  Ain't on paper, in stone or metal, it is bye bye.  It blew up barreries, melted telegraph lines and a lot more.

Gold, silver, copper, nickle,  and hard cash will survive.

Solio's picture

Coming soon! The all new and improved digital genome!

p00k1e's picture

$1,000,000,000,000,000 or bust!

Stuck on Zero's picture

Already there.  I bet my wife $900 trillion that interest rates would reach 5% next year.

Solio's picture

Now that is a lot of zeros!

KnuckleDragger-X's picture

Poof, gone in a cloud of digital dust.... We had to destroy the economy in order to save it.....