The Federal Reserve, and now the European Union have set the stage for the biggest collapse in bond markets that will make the sub-prime financial crisis look like a cakewalk
The RIG Count has dropped also but this is a misnomer because unlike in ‘old fashioned drilling times’ where one Rig represented One well, now one RIG often represents multiple wells attached to the one Rig due to modern drilling technology.
The fact that Walmart raised wages in the manner that it did ought to have alerted the Fed that something is going on in the underlying employment dynamics of the labor market that they aren`t addressing with their current ZIRP stance.
ZIRP in essence is deflationary in nature, it becomes a self-fulfilling, reinforcing slippery slope of “Monetary Extremism” and should be rejected at all costs!
At 30 basis points yield, a short on this German Bund via the futures market is basically a call option on the utter destruction of this Massive Yield Chasing Strategy on behalf of financial institutions...
The Tulip Lunacy in the Bond market is just off the charts stupidity at its finest! The U.S. 2-Year Bond is currently pricing in no rate hike, and in fact, a negative rate of inflation over the next two years....
Greenspan was criticized by some for keeping the loose monetary policy far too long leading to the housing bubble. Chairwoman Yellen would be prudent to learn from history and not to repeat the similar missteps.
The only reason this bond bubble exists isn`t due to the lower price of oil, it is directly a result of too much cheap liquidity via ridiculously low interest rates by central banks.
We know low interest rates and QE hasn`t worked, or they wouldn`t have to be re-initiated in the form of additional QE Programs, and we wouldn`t still be having this entire conversation 7 years after ZIRP began.
