Is the Bond Bubble Over?
The bond bubble has been a bubble that has been long withstanding since the dawn of the stock market and it may finally be on the verge of collapse. After all, the stock market bubble is collapsing and Bitcoin will collapse to under 1000.00 so why not pop all the bubbles at once?
While normally people equate yields rising (bonds falling) as a 'good thing', the reality is, in bear markets its actually the antithesis. Yields fall before a recession and rise sharply once you are in the recession.
The key point is with yields as low as they are, there is a high probability that the bond market may be losing (or have lost) total confidence in the governments ability to pay debt especially with the massive stimulus coming out of the printing presses to "combat the coronavirus". With the voracity of the volatility in the bond market, before to the downside, and now to the upside, in contingency with the Fed now buying bonds, we could see the bond bubble collapse which is the Mother of all bubbles in market history.
If you look at many bond ETFs and bond notes themselves, it appears many of them have formed a final shooting star; perhaps the bond market believes rates will go negative and at that point all hell will break loose.
Only time will tell.
The bond bubble burst is near. Equities have a long way to still fall.
Hold cash and play shorts.
- zSplit
While normally people equate yields rising (bonds falling) as a 'good thing', the reality is, in bear markets its actually the antithesis. Yields fall before a recession and rise sharply once you are in the recession.
The key point is with yields as low as they are, there is a high probability that the bond market may be losing (or have lost) total confidence in the governments ability to pay debt especially with the massive stimulus coming out of the printing presses to "combat the coronavirus". With the voracity of the volatility in the bond market, before to the downside, and now to the upside, in contingency with the Fed now buying bonds, we could see the bond bubble collapse which is the Mother of all bubbles in market history.
If you look at many bond ETFs and bond notes themselves, it appears many of them have formed a final shooting star; perhaps the bond market believes rates will go negative and at that point all hell will break loose.
Only time will tell.
The bond bubble burst is near. Equities have a long way to still fall.
Hold cash and play shorts.
- zSplit
Comment:
Bonds continue to overall be sold off (rising yields) despite uncertain times and the broader equity market under siege.
This could be the end of the bond bubble as Governments have printed money galore and offered MEGA stimulus in the wake of the coronavirus.
Is this the end of the bubble? It appears it could be at this point and that is not good news for the broader market as it means this could be an impending financial crisis due to credit issue and bond buyers are factoring that in + governments inability to repay debt + inflation.
- zSplit
This could be the end of the bond bubble as Governments have printed money galore and offered MEGA stimulus in the wake of the coronavirus.
Is this the end of the bubble? It appears it could be at this point and that is not good news for the broader market as it means this could be an impending financial crisis due to credit issue and bond buyers are factoring that in + governments inability to repay debt + inflation.
- zSplit
The bond bubble will still burst but it hasn't burst yet!