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The "Great Distortion" - Presenting 300 Years Of European Bond Yields
Things in Europe were normal for about 300 years... and then Mario Draghi's central planning took over.
Deutsche Bank shares a collection of charts of 10 year yields back through the centuries for the main European Government bond markets and also for the US, UK, Japan and Swiss equivalents, as well as 5-year yields over a much shorter time horizon (decades).
As DB notes: "only when you eyeball these charts can you start to comprehend the distortions that have occurred and the uniqueness of the current situation. Many people now think European yields can go even lower but many of these same people thought they'd go higher 6 or 12 months ago so one would caution against placing high convictions on anyone's forecasts for yields at the moment (including ours)."
We wish the ECB all the luck in the world when the time to unwind the biggest distortion in European bond yield history finally arrives.
Heeeere's Europe:
But it's not just Europe: "everyone else is doing it too."
And 5 years - look for things to get a whole lot NIRPier before everything falls apart:
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hahahahahah
And if interest rates go up in the PIIGS -- its completely game over. Yes, the EUR is completely sustainable.
Speaking of bonds these are some good posts:
http://www.debtcrash.report/entry/debt-taken-on-by-fools
http://www.debtcrash.report/entry/i-bought-what
I am 100% confident that rates will go back up (eventually) ... but I don't think money will look the same ... I can't see the future, but it will be a new money ... something people can trust ... something that will bring to heel the profligacy of governments and politicians ... if only there was a money that had these qualities ...
Regards,
Cooter
Nope, there will be no 'eventually' as long as these people are running the circus. Most of the world is so deeply in debt that it's unpayble, so just keep digging the hole deeper and hope you come out on the other side.
Ok, so how does retail short Europan debt - other than the currency?
There is no other way. If you short the bonds you are saying the ECB will stop buying. If you buy a put on the bonds you are saying you know when they will stop buying. If you short the banks you're saying that the ECB won't take all the trash off the banks balance sheet and hand them clean reserves instead - but that's what the Fed did and the ECB seems to have adopted the Fed playbook. If you don't know those things - and I don't - the only thing left is the currency, because in all these options the ECB must print.
When does one stop shorting the EUR? When does Germany say Nein.
In 4 years of posting the question, "How does retail short X?" on ZH, this is the first decent response.
Thanks!
EUO, the 2x short EUR ETF, doesnt decay badly. I did pretty well in EUO these last six months. When SHTF though suppose it's counterparty riskville on top and derivatives all the way down.
I'd say a minus 20% on any Euro 5 year is a back up the truck moment.
Your welcome
"Things in Europe were normal for about 300 years... and then Mario Draghi's central planning took over"
what? no mention of the global reserve currency? sure
The Yuan (Renminbi)?
in his defense, probably looks like it began much longer before Super Mario
Yeah.. probably when he was somewhere between Yoshi's Island and the Valley of Bowser from the look of the charts.
The problem here is the x axis being set at zero. If we just nudge that down to -20 things will not be so gosh darn dramatic.
They are going to have to move the x axis around on the EURUSD as well...
That is the correct attitude. We just have to adjust the height of all the goal posts. People will get used to it and wonder why they had not done if before.
and deflate our balls.
Interest is at an all time low.
Interest, I believe there is an exhibit on the subject in the Museum of Financial Oddities...
and it appears that risk ( of payment, not vix ) is at an all time high. What could go wrong?
It's all a cycle. Im long Eurasian bonds, short Oceania. Or is that backwards? Oh well, TV is still on.
Ignorance is Strength....
it's just worst since 300 years ago, don't worry. Typical zh with low length of time. Can you tell us about 1000 years ago? /sarc
Tree rings, ice cores, and peat bog pollen counts might help. Let's hope so because a lot of government money goes into collecting storing and massaging data about them.
I hope the old man got that tractor beam out if commission, or this is going to be a real short trip.
anyone know what a singularity is? This has the making of blackhole.... Dark times ahead. It was fun while it lasted
Gravity, it will get you were you wanna go.
Whenever the clusterfuck finally arrives, everybody's in one boat. It's all amazingly synced.
approaching the event horizon.... we don't need eyes where we're trading
When you can flick a switch and have light, or go into a store and have any kind of food you want at your fingertips - fantasies such as negative interest rates and money from nothing seem normal rather than perverse abominations.
I"m stocking up on candles from the 99 cent store.
Tampons. I bet they don't make them domestically anymore. Ask any Venezuelan.
Nice charts, so...what's the problem exactly?
I mean..germanys been worse off..look at the 1st chart..like the early 20's. (for a hot sec). and they came back...
;)
all for a couple banker bonuses... Amazing.
Can you show us a chart of total debt...and I think you can see what is happening. Lucky that Obama on his last day in office will issue edict and will forgive all debt everywhere(well at least for socialists making over $500k)!
I think it's fair to say these are historic lows with no hyperbole
I have no interest in interest