"“We’ve intentionally blown the biggest government bond bubble in history,” confessed
Andy Haldane, Executive Director of Financial Stability at the Bank of England,
to Members of Parliament in London last week. The bursting of that bubble was a
risk he felt “acutely,” he warned. There have already been “shades of that.” And
he saw “a disorderly reversion in the yields of government bonds” as the
“biggest risk to global financial stability.”
And “shades of that,” as Haldane put it with classic British humor, namely
understatement, are visible everywhere.
Ten-year Treasury notes have been kicked down from their historic pedestal
last July when some poor souls, blinded by the Fed’s halo of omnipotence and
benevolence, bought them at a minuscule yield of 1.3%. For them, it’s been an
ice-cold shower ever since. As Treasuries dropped, yields meandered upward in
fits and starts. After a five-week jump from 1.88% in early May, they hit 2.29%
on Tuesday last week – they’ve retreated to 2.19% since then. Now investors are
wondering out loud what would happen if ten-year Treasury yields were to return
to more normal levels of 4% or even 5%, dragging other long-term interest rates
with them. They know what would happen: carnage!..."
at http://www.zerohedge.com/contributed/2013-06-18/biggest-bond-bubble-history-turning-carnage
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