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The Japanization Of Global Bond Yields
Despite proclamations that US Treasury Bond yields can't drop any further... surely... At 1.27%, US 5Y Yields are higher than 18 other developed nations in the world. Switzerland's 5Y yield is the lowest in the world at -21.9bps (and only 6 developed nation bond yields are higher than the US). Still think US yields are 'too low'?
Charts: Bloomberg
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https://www.youtube.com/watch?feature=player_detailpage&v=gEmJ-VWPDM4
But, the fed is going to raise rates any time now...
Really...
I mean it...
Seriously...
I'm not kidding...
Just you wait and see...
Even if they do, it won't matter. Yields in the real world aren't going anywhere but down. Nobody is buying them for yield or on an inflation+ basis.
Exactly. German 10YR yield today reached .42% with some of the smarter sellside analysts expecting zero (!) in the coming weeks/months. Swiss 2YR yields were at what - minus .45%? If you don't believe in US decoupling then the long US bond is the place to be for the next months. However, it will be interesting to see the performance of the USD once rate increases are off the table.
BTW: Great overview page for local-currency bond yield curves (and surprisingly accurate numbers):
http://www.investing.com/rates-bonds/european-government-bonds?maturity_...
-5% is a grand slam home run next to -50%
Shorting T's is the best trade for the next ten years.
Govt reporting great numbers should had have rates up to 5% on the 10 year by now, so we now know they were all bullshit
Only thing scarier than hyperinflation is massive deflation - implosion, buried in the hole and covered with dirt.
Later civilizations will study us and joke about us - the gluttonous Pompei of today.
Can get both if central banks pull a Gideon Gono to fight a deflationary collapse...
Ben said one phone call, and fifteen minutes..
Finally
Finally, some good prospective on how that "race to the bottom" is going.
You hear that Mr. Anderson?... That is the sound of inevitability... [/Agent Smith]
+ 1
Well yes, I do... but then I think it's absolute madness that Japan 10-yr yields less than 0.3% as well. Clearly I'm the insane one.
great news! fiat currency is finally headed to its intrinsic value only as a medium of exchange for a store of value. it is worth a service fee for enabling the transaction and a storage fee for providing instant digital access for cash liquidity needs.
Do I think they are too low? Yes. Will they go lower... Yes they will.
Rates are going much lower. A lot of people fail to realize the coupon value of bonds rises when yields drop.
When you have deflation or very low inflation that can be more attractive than yield.
It's also important that people understand the difference between devaluation and inflation. We've all experienced huge increases in "day to day" living expenses due to central bank printing(devaluation). Over $usd 11 Trillion since the GFC in 2008.
Central bank policy is causing even more deflation now, because of devaluation and loss of purchasing power.
i can remember dad going all in during volker and getting yields around 15-16 percent. he is deceased now, but mom is sitting pretty. if back then anybody in there right mind would have said wait for 30 years, ha. but here we are starring into the abis. one thing has changed and that is the value of money. it tells the story. time value of money is basically zero. better off going to the flea marts and looking for leave it to beaver lunch boxes...
or Corgi Matchbox Batmobiles. Last I checked they were fetching over a C note. I found a 1948 Slingerland Radio King snare drum at the Flea
Market for $10.00 [worth $1200.00] and restored it back to life for the price of new skins. Flea markets are pretty much a waste of time most visits IMHO. Real Estate is the only place where I ever saw real profit.
When all rates are negative.....what happens??
have a suckle off my NIRPle and find out
a roll of paper or paper for paper; your choice; tip, check with venzualians...