Monday, June 24, 2013

Bond Market Rout is on - we warned about it already a year ago...

On June 29, 2012, we wrote:
"THIS IS IT -  The Bond Bubble will deflate from here"

And, as an additional warning, on Monday, May 13, 2013, this is what we wrote:
 "....could [the tremors in the Japanese Government Bond] become the famous flapping of the butterfly's wings?
If this bond market (which has in implicit central bank guarantee) starts to slide, my guess is it will spill over into the confidence of other, allegedly "guaranteed" and complacent bond markets, causing them to unwind some of their excess.
This, in turn, could question the entire current investment equation of ultra-low long term interest rates, which seem to be one factor in the ever rising and extraordinarily calm equity markets."

And here's how it came out so far:

(Chart shows the Vanguard Total Bond Market ETF, which comprises a broad a wide spectrum
of public, investment-grade, taxable, fixed income securities in the U.S.)

Now the question is, if and when the Central Banks will try step in in order to stop this avalanche.
Remember, this is the biggest market in the world, and ît is tied to a massive bubble of derivatives.

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