Bond Market Rout . . . .

[errolanderson]

Investors suddenly dumping U.S. government treasuries. U.S. bond market melting down overnight.

As a result, U.S. 10-year bond yields hit 3.20%, a 7-year high . . . believe Cdn 10-year approached 2.5%. Market must now encourage investors to pick up this paper, but rates must rise to entice fresh investment. This bond rout was expected to blow at some point . . . this might be it, we'll see.

This suggests higher interest rates soon and possible pressure on equity markets.

Interesting fact for current historic U.S. stock market rally . . . there are now more stocks in-decline than than rising. Not a sign of a healthy stock market rally (IMO).

[sumdumguy]

Get your US vacation money because watch CDN dollar👎

[errolanderson]

China might be now weaponizing U.S. debt . . . .

China and Japan are the largest foreign holders of U.S. treasuries outside the U.S. Federal Reserve itself. Dumping U.S. debt is a definitely a potential threat to U.S. equity markets forcing rates higher (IMO).

The trade war has 'spin-off tenticles' and appears heating up . . . .

[sumdumguy]

China might be now weaponizing U.S. debt . . . .

China and Japan are the largest foreign holders of U.S. treasuries outside the U.S. Federal Reserve itself. Dumping U.S. debt is a definitely a potential threat to U.S. equity markets forcing rates higher (IMO).

The trade war has 'spin-off tenticles' and appears heating up . . . .

It makes perfect sense. I wondered about that as Trump went China bashing. Recent politicians have no business class but maybe this is the new modus operandi. Costly behavior, me tinks.

[errolanderson]

Bond market fallout is seen by many traders as a precursor of an equity pullback, which may have begun stateside this week . . . . . By my fear is that both the U.S Fed and the Bank of Canada will view this as green light to hike rates more aggressively. That would be a disaster in my opinion.

The U.S. bond market dive this week is due to U.S. gov’t debt problems. No more, no less. Trump tariffs have pissed off the international bankers of the U.S. Russia has dumped their U.S. treasuries. China and Japan are now dumping their U.S. debt.

To me, this is a very bad time for central bankers to blindly hike rates because their academic models tell them so. This situation is now quite similar to the misguided central banker decisions made in 1937.

On the surface, the U.S. economy is firing on all cylinders. Well, it’s time now to take real look under the U.S. economic hood.

My rant for a Saturday morning . . . .

[ajl]

It is important to understand that government never willingly increases rates. The whole purpose of central banking is to suppress them as much as possible. Inflation is the sole driver of rate increases. In the early 80's official inflation was hitting 10%. Inflation is rising so are rates. Real rates on average are still negative. I think the pressure is on for a rate increase in October as official inflation is over 3%. Nobody knows what actual inflation is as it is too hard to measure.

[errolanderson]

The global sell-off in stocks and bonds has now erased $5 trillion in the month of October.

Credit markets now stretched to-the-limit. Technicals point to further losses. Central bank policy built this massive debt bubble. Tariffs may have just popped it (IMO).

[macdon02]

The global sell-off in stocks and bonds has now erased $5 trillion in the month of October.

Credit markets now stretched to-the-limit. Technicals point to further losses. Central bank policy built this massive debt bubble. Tariffs may have just popped it (IMO).

There's one other factor .... mid terms and the dems are leading in the polls. Will they reverse everything pro business Trump has done? IF they win and take away the tax cuts would be uber bearish equities and foreign capital to entering the US. I can't see them winning as the world wide trend is against them. I know only enough about bonds to blow myself up but there's enough money in govt debt that it makes equities look miniscule and where this money eventually goes will be a force to be reckoned with. "Normalized" rates has been en vogue terminology long enough that we have to accept 8-10% is coming. Oddly enough i don't think central banks are the bad guy..... they are only simple people no smarter then any of us and wish no harm on anyone, what they say is honest. The kicker is they see and know where the pain is and that's pensions. If they implode, people will riot. So rates are being lifted to save them. It's a mess and Bernacke might have been the biggest idiot thinking he knew what he was doing. Draghi is just kicking the can till he's out. The previous solution is the next crisis.