Loading ...This was unexpected…
Real yields are exploding up… combination of inflation expectation crashing and nominal yields refusing to stay down
Bond bubble breaking? Can the fed keep this under control?
I’m thinking now more than ever.. US equities meltdown WILL continue… and gold and silver WILL continue to sell off.. bringing price below 12 month moving average…
Tip of iceberg
Edit: adding copper’s reacting to exploding real yields… not good!
The Fed will probably someday institute a cap on rates, similar to what the BoJ has already implemented. But my cynical guess is that that could be a long ways off.
I think a simpler explanation is that nothing goes down in a straight line and bond yields are simply getting a bounce to relieve the extremes in momentum indicators.
Don’t think so… it’s the fear of re-rating bond pools less than investment grade BBB thats why theres a short on the insurers…
Nice charts by the way. There can be absolutely no doubt that gold responds inversely to real yields.
Real yields are typically calculated as the difference between the rate of inflation and the 30 year, correct?
Thanks! The chart is the 5-year real yield… Here is the data source https://www.quandl.com/data/USTREASURY/REALYIELD-Treasury-Real-Yield-Curve-Rates It explains who they calculate them… looks like its the yield on the TIPs
The kicker is that the US stock market had one of its biggest bull runs in history while real yields were rising. And one of the reasons real yields rose was that commodities had their biggest drop in history between 2011 and 2016 and thereafter were simply flat to down from 2016 to present. If you ignore the conspiracy theories, you could chalk up commodities performance 2016-2020 to extremely weak real economic growth.
The added kicker now is that, as stocks are collapsing, commodities are getting hit hard and are completing what looks like a second large leg down to who knows where (100 on the CRB???). None of the upside and all of the downside and more.
Not at all unexpected. T’s have been in bull market since 1982.
And now, budget deficits are destined to blow out. The world waa ALREADY insolvent before this.
Re Fed, its important to distinguish short from long rates. Fed only ‘manages’ short rates … and many argue it merely follows market rates. But long rates are out of its control. And that’s where the trouble is building.
AND that’s why … rising real rates … I’m not surprised to see metals and miners crashing. All that will continue .. potentially for a number of years until SAVINGS are somehow reinvigorated. We’ve been eating our seed corn, so buckle up.
I’m fast realizing I know nothing…