"It Feels Like 2008" Government Bond Yields Signal "Something Very Nasty Is Coming"

Tyler Durden's picture

With global developed market bond yields crashing to record lows and almost $10 trillion of negative-yielding debt worldwide, it is no surprise that money managers are concerned that "it's starting to feel like 2008."

Global developed market bond yields crashed once again to new record lows overnight at just 40.0bps (having plunged from 63bps pre-Brexit)...

 

As negative yields become the new normal around the world. Japan and France are leading the way as demand for the safest assets boosts the amount of global bonds with negative yields to $9.8 trillion, according to Bloomberg World Sovereign Bond Indexes.

 

That’s up from $8.35 trillion before Britain voted to leave the European Union last month. The latest new entrants include Japan’s 20-year bonds, and French nine-year securities, which both saw yields drop below zero for the first time in the past 24 hours.

As John Anderson, a money manager at Smith & Williamson Investment Management in London concluded:

"Government bond yields are telling you something very nasty is about to happen. These property fund suspensions are a worry. I am risk-off at the moment, erring on the side of believing the govvies,"

Certainly seems like ever since Bernanke went back to the money-printing game after QE2 that he broke the stock market's ability to signal anything...

 

Because the days of 'fundamentals' are long gone...

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abyssinian's picture

Something Nasty is coming? they are already here! Obama, Yellen and Hillary! 

Looney's picture

 

If you draw a can on a brick wall, the Fed will try to kick it.   ;-)

Looney

froze25's picture

The first domino to fall in this global ponzi will be Japan, then England / Eurozone then the US

beeeeeep's picture

Japan may be doing the worst but they also own over $1.2 trilion of US debt.  If they get in enough trouble they will just say screw the US and gradually cash that in.  If that happens the US could be the first to fall.  I'm actually shocked they haven't been selling that debt off over these past years but then again maybe nobody is buying.

ThrownOffZHTwice's picture
ThrownOffZHTwice (not verified) beeeeeep Jul 6, 2016 10:58 AM

If the Japs sell a billion all at once, the rest will be worth a lot less, as the market will drop the price.  If they sell, it will be very very gradually.  If I owe you 10 dollars, it's my problem.  If I owe you a trillion dollars, it's your problem.

daveO's picture

Japan's still an occupied nation. They won't sell, they'll buy more.

DownWithYogaPants's picture

Oh come on!  Just seasonally adjust to taste!

Volaille de Bresse's picture

To me it'll be like "Wargames" an instant global meltdown. Joshua here we come!!

new game's picture

what we all in the "modern world of ponzi debt based growth" are experiencing, is THE LAW OF DIMINISHING RETURNS. next on deck is the law of hyper-inflation whilst deflation takes it toll in tandem...

Jack Buster's picture

Nice analogy.  I imagined a drawing of a can on the bottom of a four story Jenga tower.

ironicmerman's picture
ironicmerman (not verified) abyssinian Jul 6, 2016 8:41 AM

How clever.

Mr Pink's picture

According to the chart the SP500 is going to 100.....sounds about right

401K of Dooom's picture

Oh snap!  I thought Godzilla was bad!  This is worse!  Glad I don't live in Nihon.

JamesBond's picture

Living in Japan is actually quite nice.  The gorilla is kept in a 2DK around the corner so all's well.

 

Come and visit.

 

jb

Mr. Kwikky's picture

Like my Italian mechanic said when he looked under my Ford (short) Mustache: "It's a mess..it's a totally mess"

Philo Beddoe's picture

My Finance textbook in college did not mention any of this. I think I was lead astray. 

diniweidrwydd's picture

We've all been led astray.....

blindman's picture

http://www.maxkeiser.com/2016/07/boom-bust-max-keiser-and-stacy-herbert-...
Boom, Bust: Max Keiser and Stacy Herbert, turmoil in in post-Brexit markets
Posted on July 6, 2016 by Stacy Herbert
minute 13:30

RawPawg's picture

Got Silver?

fix it for ya

csmith's picture

Measuring stick for the "equity premium" obviously broken. Risk free rate goes lower, stocks go higher. That is all.

undertow1141's picture

The Road to Nowhere would have also been acceptable.

All is chosen's picture

It's a different sameness, or a different different, but it isn't quite the same.

There is somethng I have to do next. Now what was it again? hmmm. 

Dr. Engali's picture

Yeah, whatever. It's felt like that almost everyday since 2008. I'm not holding my breath.

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Jul 6, 2016 8:40 AM

This market is so distorted you can never really figure out what anything means.  The safer crash bet is to just long treasuries rather than short the US equity market.  Its been proven that the Fed will do all it can to keep US equities afloat but they can't crash their own treasuries and continue playing this game.  Choose the path of least resistance. 

Smerf's picture

Soon all bonds have a negative yield, a symptom of the perverse nature of these policies.

flyingpigg's picture

So I should buy safe bonds from France and Japan if I'm worried something will happen? 

Oldwood's picture

We all know what is driving the divergence in stock prices relative to factory orders and just about any other real economic indicator.....the direct interventions by governments and their central banks. Remove that and you would see an instant convergence. What we do not know is how long this divergence can be sustained as it has outlived most of our longest projections.
Like with the "big one" in CA earthquakes, just because it is long overdue, does not mean it's not going to happen, and just as those predictors indicate, the longer it takes to happen, the worse the consequences will be. Pressure is building along its (de)fault lines and it is doubtful that it will be released slowly and without destruction.

Seasmoke's picture

Also right about when Gold collapsed from its $1900 high. We see what you did Bernanke. Fuck You !!!

trollster's picture
trollster (not verified) Jul 6, 2016 8:49 AM

Naaah. It's contained. Nothing to see here. Central banks got our backs.

They got our backs. Next thing is penetration, though ;)

drivenZ's picture

If everyone knows "something very nasty is coming", will it ever actually come or ever be as "nasty" as 2008? I'm inclined to say no. There weren't many people in 08 who could imagine something of that scale happening, certainly not on main street.  With the crash so fresh in everyone's minds people are more prepared, managers are more prepared and when shit hits the fan, people also remember the huge opportunites that developed if you waited it out a few years. So, what's another crash? just another huge opportunity. If rates can't go lower, then the QE will restart, fiscal spending will be boosted, etc. etc. There's no end. We'll just keep meanddering along. ebbs and flows, the way it's always been.        

flyingpigg's picture

Consensus is a poor indicator. Before 1-1-2000, everybody was worried the world would collapse because of Y2k computer issues.

diniweidrwydd's picture

WW3 could make things a lot worse than 2008......

Jtrillian's picture

What is coming is going to make 2008 look like a cake walk.  We are about to find out what happens when you reward corrupt banksters bad behavior. 

Hillarys Server's picture

Are there any other good Armageddon investments besides only silver and gold?

Like something where you'll lose the entire investment if you're wrong, but if you're right you get a 100x return?

Like an option on something or other.

But an option on what?

RedDwarf's picture

Options are a function of a working market system, so no to that one in a 'armageddon' scenario.  In a true armageddon scenario the only return that matters is survival.  For that your best 'ROI" is getting into shape, developing certain skills, basic tools, bulk food in long term storage (google mylar bags / ogygen packets / 5 gallon drums for videos on how to store food this way for cheap).  Ammo, guns, booze.  Solar panels and other technologies to live off the grid.  Clean water, farmable land, sensible neighbors that you know and trust.  Some good animals, a strong and level-headed mate / significant other.  Not living anywhere near a large population center or near anything worth hitting with a nuclear strike if you want to go that far.  Have some important and critical backups in faraday cages.  (Cardboard boxes wrapped in layers of foil and plastic will work).

Fact is in a armageddon scenario, gold and silver don't mean much either.  Money is a function of civilization you know.  If however you are talking bets that might give you 100x return or more or might go to zero, or even both in order, bitcoin and way out of the money put options on gold or gold mining stocks are your best bets.

Personally I think you are over-reaching.  We'll probably have a crack-up boom.  Physical gold and silver are your best bets for that, but you want them in small units if possible.  Have a few bitcoins as a lottery ticket that will likely not pan out.  Maximum valuation on those things if BTC becomes a major currency is like $100K to $1M per coin.

diniweidrwydd's picture

Now that's what the preppers sound like! Guess what?  I'm on their side. I'm fleeing "civilization" to go and live on a farm in the mountains on a tropical island away from nuclear target ( just as RedDwarf says.) Got a few animals & fish to keep, clean spring water and being an electronic engineer, will be able to generate electricity and also able to produce bio-gas. That's the plan however, the nuclear winter could really screw it all up.......

Dragon HAwk's picture

If you like risk, you could  buy cases of Bibles, they may just become popular reading during Nuclear Winter.

getting paid in anything but paper might be risky though.

micmac's picture

nasty taste is the new normal.

enjoy!

sgorem's picture

$10 trillion of negative-yielding debt..........laughing out loud, when did WE EVER leave 2008? there's never been a "recovery", we've listened to .gov lies, walled street lies, main stream media lies, lies, and more fucking lies. anyone with @ least 1 brain cell left can see as far back as 2006-7 that this fucking circus has been out of control. we've been lied to, swindled, fucked over by everyone from the potus & his minions, to your state and local elected, or not, criminals. profits made by walled street with our money, wars carried out endlessly with our money, huge salaries paid  incompetent.gov employees with NO accountability, 2 sets of laws in this country, 1 for the elite, the other set for us. trillions of $$ printed out of thin air to backstop fraud and greed @ our expense, queer laws being argued over instead of getting the country back on track, fucked up foreign policy, fucked up national policies. i have no idea HOW BAD this is going to end, but the time seems right for it all to burn the fuck down, shed some blood and we start over. whether that means lock & load, or hone the pitch fork tines, something's gotta fucking change in this cesspool of bullshit. say amen.  

IridiumRebel's picture

2008 will be nothing compared to what's coming.

mikkip's picture

Ye Ye... something nasty coming... heard all before... for the last 8 years... got boring a long time ago... but i suppose bad news sells...

diniweidrwydd's picture

See sgorem's post below - just about sums it all up really......

moneybots's picture

... it is no surprise that money managers are concerned that "it's starting to feel like 2008."

 

How can that be? Bernanke was supposed to have fixed things.

moneybots's picture

"Certainly seems like ever since Bernanke went back to the money-printing game after QE2 that he broke the stock market's ability to signal anything..."

 

It's a HUGE gap fill on that chart.

moneybots's picture

"Japan and France are leading the way"

 

Now that's a bad OMEN.

katchum's picture

That chart tells me that when the central banks stop monetizing, bond yields will surge and stocks will crash. It's as easy as that, all that money will then flow into something else like gold.

diniweidrwydd's picture

That's what I keep hearing too.