Global Bonds Suffer Biggest Crash In Over 25 Years

Tyler Durden's picture

With US Treasuries the most oversold since 2007, Bloomberg reports that bonds around the world are headed for their steepest two-week loss in at least 26 years as President-elect Donald Trump sends inflation expectations surging.

The Bloomberg Barclays Global Aggregate Index has fallen 4 percent in the period through Thursday.

 

It’s the biggest two-week rout in the data, which go back to 1990. Federal Reserve Chair Janet Yellen fueled the decline by saying Thursday an interest-rate hike could come relatively soon.

 

But as Bloomberg reports, not everyone is charging into this trend...

“We maintain our short position in Treasuries,” said Mohit Kumar, head of rates strategy at Credit Agricole SA’s corporate and investment banking unit in London, referring to bets an asset’s price will decline. “That said, we don’t expect a sustained selloff from here. Valuation is not rich any more and is close to fair.”

 

“Trump is a game changer,” Park Sung-jin, the Seoul-based head of investment at Mirae Asset Securities Co., which oversees $7.61 billion. “I was bearish, but the current level is more than I expected. It was harsh.”

 

The selloff has gone fast enough that it’ll probably pause before yields press higher in 2017, Park said.

 

A strengthening dollar and Trump policies that curb trade may hurt growth and limit the increase in yields, Kushma, who helps oversee $406 billion, said in an interview in Singapore Thursday.

 

“We’re still worried about rising U.S. yields,” he said. “In the short term, we think they’ve peaked. They could easily go up again.”

And with bonds the most oversold since 2007 - and with rallies
formed the last 6 times bonds have been near this oversold, there may be
hope that this yield spike is over...for now.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Dead Canary's picture

President Obama on whirlwind tour. Meets With EU Leaders for Last Time.
(Snif) goodby Merkle (snif) goodby Hollande (snif) I guess the next time we meet we will all be in hell.

cossack55's picture

Or in the UN with SecGen Obummer

mmanvil74's picture

Can anyone else guess where the Tylers' money is parked?

The change in tone from 'crashing (soon to be rebounding) bonds' to crashing (always about to crash worse) stocks' is stark.

Just sayin'.

Bring the Gold's picture

Care to elaborate? If I read you correctly you are saying the Tyler's are in Bonds is that right? This has always been a Bearish site since it's inception with some notable exceptions here and there (e.g. cheering the Rare Earth Bubble, while also saying it was a bubble).

SimplePrinciple's picture

That would be a "reaping the whirlwind" tour, one we may all be getting some measure of.

SpeakerFTD's picture

Oversold conditions.  Expect a rally.  Or a disorderly crash.

LawsofPhysics's picture

All by design.  In fact, a global bond is precisely what the moneychangers want. Remember, an 8% yield looks great but is rather useless if inflation is running 25% or higher!!!

new game's picture

so all central banks plumb their shit into the ocean. but which ocean?

LawsofPhysics's picture

irrelevant as global Weimar is in fact inevitable now.

FreeShitter's picture

Long tampons and sweet, stinky weed.

KnuckleDragger-X's picture

I hear you can get a really good deal on 100 year Mexican bonds, so full speed ahead.....

Hohum's picture

If you work in money, you must think debt can increase faster than income forever.

new game's picture

hohum, this trend is not a friend i want to met. yes, lower rate or bust up crack down chaotic disorderly fucking race to the bottom of the humanity and rubble of poverty/anarchy. yup, ya on to sumtin uuuuge..

Dapper Dan's picture

This guy Robert worked in "money" and look what he said.

“If all bank loans were paid, no one would have a bank deposit, and there would not be a dollar of currency or coin in circulation. 

This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money, we are prosperous; if not, we starve. We are absolutely without a permanent monetary system. 

When one gets a complete grasp upon this picture, the tragic absurdity of our helpless position is almost incredible–but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon."
Robert H. Hemphill

LawsofPhysics's picture

This is complete bullshit for two reasons.

1) banks are NOT doing traditional banking (where money has real collateral backing)

 

2) In the current monetary system bankers and financiers are nothing but useless middlemen stuck between the computer/printer (where money is now created) and the producer/consumer in the real economy.

These useless fucks have been buying our "representation" in order to maintain this unique privilege.

Fuck em.  execute the middlemen!!!!

Let the economy evolve already!!!

Dapper Dan's picture

 

touché

 

 

Robert Hemphill
Credit Manager of Federal Reserve Bank, Atlanta, Ga.
chairman of the bored's picture

That was then,now free money for half the peeps is sent to the banks on the 1st and 3rd....you should see the partys at ATMs at 12pm on those nights.....hundreds of dindus and wetbacks at every machine...fightin.fuckin,and fixin flats..

buzzsaw99's picture

the solution to higher rates is :wait for it: higher rates. duh.

new game's picture

higher rates=print fest orgy of money changers skim to win on steriods. can't wait...

AlexCharting's picture

This fat bull reminds Trump of Rosie O'Donnell! S&P500 has been an absolute mess since Aug. 2015, with the very chart looking like an electrocardiograph! Obesity drastically increase risk of heart attack, and this bloated bull needs to go on a diet asap or face the consequences. I hope the bull has a massive heart attack under Obama’s watch, though it’s apparently covered by Obama-Care anyway :P

RLE's picture

ZH...try to understand this...most of us do not give a fuck about the bond market...or gold or silver...or any of your stupid charts...tesll us about why SS has not increased in years while the food at the store goes up everyday...no one gives a rats ass about banks or Wall street...and I know you might thing that is what makes it all work...well it doesn't...at least it doesn't work...tell us how Norway does it or other successful contires and how we can get that here...

Arnold's picture

I'll tell you how to do it.

Come closer, I want to keep this to a whisper.

Closer.

 

 

 

 

 

Get a fucking job and be good at it.

CrimsonAvenger's picture

Are you sure you're in the right place?

FX223's picture

I think you should be on Facebook not ZH.

_ArC_'s picture

I thought we only have smart members? Then I see this guy and million dollar bonus guy. Posting the dumbest shit! ZH should screen members more thoroughly. Where is your brain dude? This aint Friendster!..

Lockesmith's picture

MDB writes great satire, although I haven't seen him since Nov. 8th.

It was entertaining watching Clinton's campaign become unsatiresable even by him as they jumped the shark.

Funny how mad he makes supposedly intelligent posters.

hooligan2009's picture

nobody does it, well maybe lithuania.

libtard socialist policies, endorsed by "cheapest to produce" global corporatist tax evaders, supported by central banks have corrupted the entire global economy.

social security increases are a poltical choice - other (e.g. Military Industry Complex) removes money that could go to SS, the number of SS recipients growing each year takes a big bite, so does spending on EBT, safe spaces at univeristy etc etc

you could have your SS increases to cover your rising costs were inflation actually measured appropriately for SS beneficiaries, rather than inflation for "urban seasonally adjusted" or "personal consumption expenditure deflator" within gdp which captures tv's, i-phones, rent charged to kids living in parents basements, uber fares undercutting cabs, amazon goods undercutting stores, etc used by the government statiticians in the new normal snowflake society.

your angst is real and justified because you entered into a contract with the government to take care of you in exchange for taxes. on top of that markets are supposed to help people not make them poorer- the swap is vast and is the result of decades of attrition from global corporatism/socialism.

Ace006's picture

You were going good there till you started talking about one of the Nordic lunatic asylums.

Able Ape's picture

For the last 26 years the Bond Market submarine has been in drydock getting fitted with screen doors; they've just christened it and let it slide into the water...NOT Good!...

Thought Processor's picture

 

Given the size of the bond market, along with the size of the move, I will venture to say that things are about to get interesting in other markets as well.  

 

Usually takes some time for everyone to catch up with the big money. 

 

pitz's picture

Bonds tend to be liabilities of corporations, so if the value of those liabilities decreases, then the value of equity should increase.

However, there's potentially a demand side problem, particularly in the highly indebted economies. 

Cthonic's picture

corp still has to pay it back at par; can only take advantage of the drop in market price if they have cash to buy them on the dip.  meanwhile equity prices have been held up by buybacks, funded by issuing cheap debt.  higher rates throw that machine into reverse.

BolanosGhost's picture

I want to see the losses on suicide.. err centurion bonds. convexity curve on those must look like a damn double black diamond.

Thebighouse's picture

We need market driven rates and that is what iit is all about.

Let a FREE MARKET DECIDE AND DEAL WITH IT.

Trouble is we let MINDLESS TOILET PAPER BRAINS MANIPULATE IT....right barry...bernanke,.yellen..greenpeace..er...span...and on and on....

 

Here is a debt fix...EVERYONE WHO VOTED FOR BARRY GETS TO REPAY TO FIRST 10 TRILLION..... THE SECOND 10 TRILLION IS RETIRED BY ELIMINATING

81,000 PAGES OF REGUALTION TIMES AT LEAST 4 AND ALL THE GOVERNMENT DEPARTMENTS TIED TO THOSE REGULATIONS.  JUST F'IN A TWEED GONE....

A free society needs to be just that.  

and then deal with it.  

 

_ArC_'s picture

So Monday Crash?...
Next week?....
Next month?...
After oath taking?...

Jungle Jim's picture

I guess all this is good news for *someone*. Not for me. I don't have any bonds *or* stocks. All I've got is few gold coins that are suddenly worth much less, and look like they're going to go on losing value rapidly, and for the foreseeable future.

silverer's picture

Nope. Those gold coins will come through for you when the SHTF. Keep in mind, that right now one single one ounce silver coin will buy six months worth of food in Venezuela. Hang onto those coins, no matter what.

_ArC_'s picture

Gold is going for $2,800.00 in India at the moment.
Which is about their average annual income per capita!
Think about it!

Paul Morphy's picture

All other markets - stocks/shares/future etc - their prices are predicated on the bond market values?

silverer's picture

Can't keep the Ponzi going when the truth comes out. Imagine that!

Claire Voyant's picture

It's pretty obvious most of you have had a long week.  Enjoy your weekend.

Nomad Trader's picture

Every five years or so I see a really great risk/reward trade. This time it is long TMV US (Short long bonds). You all know that over the last 2 days long bonds should have bounced if they had underlying strength. But they failed. So Monday is either a third attempt at a bounce or the nail in the coffin that means 'the biggest crash in 25 years' is in fact just the beginning of the bear market. Since long TMV downside is capped you can chuck in $100k and forget about it. Because that $100k downside contrasts with $500k in upside. Does everyone think that 'this time is different' and rates will never rise again? http://stockcharts.com/freecharts/yieldcurve.php And does everyone think CPI isn't rigged? http://www.chapwoodindex.com/