Despite Stock Strength; US, German Bond Yields Are Tumbling

As stocks surge to record-er-est highs, so bond yields and the yield curve are collapsing further...

Buy all the things...


So much for that 'tantrum'... 10Y Bund yields are tumbling...


Treasury yields are erasing the tantrum spike too...

Perhaps Gundlach was right - Gross' bear call was premature?


And the US yield curve continues to collapse...

As Goldman notes, CFTC positioning signals investors also expect higher yields in 2018.

After bearish US 2y and bullish 10y positioning for much of 2017, 10y positioning has now become bearish as well. This is consistent with the investor feedback we received in our global strategy conference last week in London, where 60% of participants polled expect US 10y yields above 2.75% by 2018YE.

And while bank stock prices do not care, Citi's Net Interest Margin slid to an all-time low...


Davidduke2000 Tue, 01/16/2018 - 10:08 Permalink

the market is planning to move interest rates big time 5 points at least, I do not know how the central bank are going manage this surge that show the world that central banks cannot dictate interest rates, the demand for credit with real money is in high demand and interests should follow the demand and since new bonds have to carry the new rate, the old ones are getting dumped, it is quite simple, but you would not hear anybody from cnbc explain it this clear.

Haus-Targaryen canisdirus Tue, 01/16/2018 - 10:19 Permalink

In theory the bond market should be less risky than equities as debt gets paid out first in insolvency proceedings; but right now the bond market has melted up to such an extent -- and issuers are so over-leveraged at this point -- in insolvency no one gets anything anyhow. 

When the average idiot figures this out, expect massive shifts from people moving from eye-watering risk assets (debt) to just KYS if this goes south assets (equities).


Forward soviet!    

In reply to by canisdirus

JohnGaltUk Haus-Targaryen Tue, 01/16/2018 - 17:33 Permalink

You are on the money. When folks realize that western governments have no intention of paying their sovereign debt, the DOW will hit 40k... abouts.

Folks forget that the whole of Europe defaulted on their sovereign bonds in 1931/2 in a very similar situation but it is worse today because interest rate suppression have destroyed private pensions schemes we are going to have a whole bunch of old people flooding the job market willing to work for porridge and toilet paper and single mums will blow me for a couple of quid outside the school gate.

In Greece married women are now prostitutes and citizens have sided with the thugs.

In reply to by Haus-Targaryen

null Tue, 01/16/2018 - 10:22 Permalink

Smart money obviously knows something is FUBAR, and to say that this something is the USA, is cliche at this point ... guess again, examine other miracles getting long in the tooth.

Pasadena Phil Tue, 01/16/2018 - 10:35 Permalink

Okay, ZH has declared every one of the last several thousand days to be the last chance to get out alive. But today is different. It is the last chance to get out alive. Sell everything!!!! Now!!!

Paul Morphy Tue, 01/16/2018 - 10:52 Permalink

Yield from stock

Yield from bonds

This appears to be the current dilemma for "investors"

If investors are fleeing from lack of yield in bonds to better yield in stocks, who is continuing to support demand for bonds (thereby lowering bond yields)?


taketheredpill Tue, 01/16/2018 - 11:05 Permalink

This market cycle will be complete when everybody is fucked.  Equity "investors", High-Yield "analysts", AND Govie bond buyers. Everybody.

Still hold Gold and Miners (not the Ranch but a significant exposure) and still think Gold will end flat at worst when this thing collapses.


MusicIsYou Tue, 01/16/2018 - 11:28 Permalink

Bonds will never return to anything resembling normal because there's nothing stable about society, and the west is almost doing everything it can to trash it's own societies.

chinooky47 Tue, 01/16/2018 - 11:51 Permalink

Makes complete sense.  Who wants to invest in Europe anyway.  Only a fool would put money over there especially since there are much better places to invest: US and emerging economies for example.

nuerocaster Tue, 01/16/2018 - 13:26 Permalink

Let's see 40yr parabolic rise in global productive capacity.

Followed by the greatest capital flight sequence in history.

Don't forget it began with flight to Europe periphery and EMs followed by a total reversal.

Nice little pump prime into tsunami.

ANALYZE THAT! No precedents? Tons off the books?