Bonds & Interest Rates

Roughly Every 80 Years, the Piper Always Gets Paid …

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Posted by Larry Edelson - Money & Markets

on Wednesday, 02 November 2016 05:38

By this time next week, we’ll all know who the next president of the United States will be.

But it won’t matter one iota. The reason: We’re in the early stages of a sovereign debt crisis, a massive storm that hits the global economy roughly every 80 years and where the piper always gets paid.

Proof positive it’s starting: While central bankers have done virtually everything they could think of to prop up bond prices and depress interest rates to spark global economic growth …

A Great Bond Bust Is Starting to Unfold

Even negative interest rates in Europe haven’t done the trick of stoking its economy.

And now, just as I forecast last year, the bond bubble is starting to burst. Worldwide, bonds lost 2.9 percent from Oct. 1 to Oct. 27, a devastating blow in only 26 days.

The last time the bond market was dealt such a blow was May 2013, when then-Federal Reserve Chairman Ben S. Bernanke signaled the central bank might slow its unprecedented bond buying.

Screen Shot 2016-11-02 at 7.52.00 AMNaturally, Europe led the losses as investors start doubting the viability that the ECB can continue to purchase debt, without boxing itself into a corner that will lead to bankruptcy, just like it will eventually for our own Federal Reserve.

The central banks (and governments) of Europe, Japan and the U.S. are all toast — it’s merely a matter of time before everyone realizes it.

There is simply no way …

— Europe, Japan and the U.S. will ever make good on the social promises and safety nets that they promised their people. And …

— No way each country’s central bank will survive. All three are between a rock and a hard place, with a total $12.7 trillion in debt among them that they will never be able to get rid of without crushing the global economy and sending interest rates to the moon.

Even if sold over a decade, they’d be selling more than $1.2 trillion worth of bonds each and every year. The market can’t handle it.

Welcome to the World’s Worst-Ever Sovereign Debt Crisis

Sounds trite. And I know what you’re thinking: “But Larry, we’ve been here before and nothing has ever happened. Governments can just kick the can down the road.”

My response: That’s true. In normal times, they can kick the can down the road.

But these are far from normal times. And it’s not even the level of debt that matters right now. It’s the revolution that’s in the air. You see, roughly every 80 years or so — the piper has to be paid.

It happened in the Great Depression (which led to WWII) … it happened roughly 80 years before that in the late 1860s … before that in the 1780’s … and pretty consistently every 80 years throughout Europe’s history.

There is no free lunch. Even for governments and central banks. The piper always gets paid.

So, What Does It Mean Directly for You and Your Investments?



Bonds & Interest Rates

The Most Crowded Trade in Bonds Could Be Crumbling

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Posted by Bloomberg

on Wednesday, 26 October 2016 09:45


  • -1x-1Global government debt due in decade or more swells by record
  • Duration buildup creates vulnerability to interest-rate shock

The hottest craze in fixed income is at risk of overheating.

A headlong rush into higher-yielding, long-term bonds in recent years has created one of the most crowded trades in financial markets. Investors seeking relief from central banks’ zero-interest-rate policies have poured into government debt due in a decade or more, swelling the amount worldwide by a record $733 billion this year. It’s more than doubled since 2009 to about $6 trillion, data compiled by Bloomberg and Bank of America Corp. show.

Now money managers overseeing more than $1 trillion say.....continue reading HERE


....related: Bank of America: Investors are getting worried that a bond market crash is coming



Bonds & Interest Rates

Bank of America: Investors are getting worried that a bond market crash is coming

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Posted by Business Insider

on Tuesday, 25 October 2016 08:10

hith-hindenburg--EAcross asset classes, investors are worried about a bond market crash, according to a survey of fund managers around the world conducted by Bank of America Merrill Lynch.

They think that bond prices are frothy, showing signs of being in a bubble — meaning that prices are much higher than what bonds are actually worth.

Bond prices rose and pushed yields lower as investor demand grew and central banks, in Europe for example, bought bonds to lift inflation and fire up their economies.

....continue reading HERE


Central bankers are able to put off the day of reckoning for years


Bonds & Interest Rates

Central bankers are able to put off the day of reckoning for years

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Posted by Jeff Greenblatt - Lucas Wave International

on Monday, 17 October 2016 09:21

The jobs number came in light at 156,000. This benefits the incumbent party because the number wasn’t good enough to invoke interest rate hike fears. It wasn’t bad enough for the market to tank. But all the other factors are still out there, including Deutsche Bank and now the rhetoric concerning a conflict with Russia is heating up.

So, my view has not changed. The markets are asleep and continue to sleepwalk in complacency and there are still too many possibilities for a black swan now only a month out to the election. I’ve heard different reports at this moment that are not confirmed, but we do know the Russians have instituted a no fly zone in Syria. What I can say is the rhetoric coming from both sides is nothing like I’ve ever seen and I was only two years old for the Cuban missile crisis.

Coming into the week, there is a real shot oil could be peaking right here. Other sectors that could get into trouble are Transports and biotech, which gapped down and extended losses last week. Here’s some interesting symmetry for housing which may finally be losing it. There is a secondary high (second one off top) at 44 days off the top and a matching price at 243. This wouldn’t mean much without Friday’s candle, which was a bearish engulfing to the day before.

fib1 oct10

This one looks like it’s going to be tough to get back and if we lose housing, we are going to lose the market. It’s not a matter of "if," but "when." It could be right now as there will never be a better time in the entire calendar year. As you read this on Monday, note the date was right near the 2007 top and also the 2002 bottom. So this specific time of year has a history of important market turns. With everything swirling around, risk remains very high for an acceleration.

Of course, we know a lot of the trouble starts in Europe, especially Germany. The week didn’t end well there. So here’s a look at what could potentially lead down this week. First of all, the DAX turned lower on a 160 hour high to high sequence while the CAC stalled at 169 hours after a 4569 high. To start the week, the bears have an edge even as the initial Monday action in Europe was good for bulls. It might be small, but it still is an edge. But that’s only Europe, we have a divergence working.



Bonds & Interest Rates

Hillary: Deceit, Debt, Delusions Part Two

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Posted by The Burning Platform

on Thursday, 13 October 2016 06:25

In Part One of this article I addressed the deceit of Hillary Clinton and politicians of all stripes as they promise goodies they can never pay for, in order to buy votes and expand their power and control over our lives.

I created the chart below for an article I wrote in 2011 when the national debt stood at $14.8 trillion, with my projection of its growth over the next eight years. I predicted the national debt would reach $20 trillion in 2016 and was ridiculed by arrogant Keynesians who guaranteed their “stimulus” (aka pork) would supercharge the economy and result in huge tax inflows and drastically reduced deficits. As of today, the national debt stands at $19.7 trillion and is poised to reach $20 trillion by the time “The Hope & Change Savior” leaves office on January 20, 2017. I guess I wasn’t really a crazed pessimist after all. I guarantee the debt will reach $25 trillion by the end of the next presidential term, unless the Ponzi scheme collapses into financial depression and World War 3 (a strong probability).


....continue reading HERE

....read part One HERE


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