The global stock market and bond markets are in a state of panic over the coronavirus. Day after day it’s been a case of lower and lower yields.
This morning, the yield on the 30-year long bond crashed another 24 basis points to yet another record low. The entire yield curve is below 1.0%. Yet inversions persist out to two years.
Crash!
The 30-year long bond yield is now inverted with the Fed Funds Rates by 12 basis points.
The Fed is going to cut rates to zero on its next move.
What’s Happening?
- Oil Price War and Liquidity Crisis Coming
- Crude Dives to $30, a Whopping $20 Below Cost of Production
- Italy Quarantines Over 25% of the Population, Trump Not Concerned
- Very Deflationary Outcome Has Begun: Blame the Fed
This is precisely what happens when Fed-sponsored asset bubbles break.
But other than that, It’s Just Like The Flu™ .
Mike “Mish” Shedlock
To Mish
Could you incl the bond price along with the yield…
To show the ..”profits” made by buying a 10y ect.. bond last year ect….
So some body is making a killing, when rates DROP…
Mike
Wow! Thanks, man this is almost the finest information that I was searching for.
Zoiks, I just got completely out of 30T’s. I will let the experts try to ride it further beyond this insane jump.
Wouldn’t be shocked if the NYSE and Nasdaq don’t open today.
That would cause even more panic.
Just widen the bid offer spreads. Try 1% at first.
I read if the S&P drops 20%, they close the market for the day.
So about 2380, some fall in one day.
Would be some big margin calls
It opened for a minute before being halted. Next halt is at -13%.
Thanks for the info.
When the 30 year is lower than the FFR, Mr. Market is screaming for the Fed to cut rates. The Fed will cut rates 1% over the next 2 weeks. And it will do nothing.
I think it’s more of an anticipation of QE. The FED will buy whatever they can at a premium. Even if it means they’re guaranteed to lose money.
This will be a big worry for the market. If the Fed starts to buy corporate America and its debt with printed money, why will non us based investors finance it. The dollar’s already fallen below 95 on a trade weighted basis today. The Fed will be dicing with catastrophe.
All these assets price collapses will again hurt the banking system.
Like the 2008 bubbles crisis, this new one in preparation right now could again bankrupt the banking system everywhere.
Negatives interest rates over here in Europe have contributed already to a serious weakening of the banks by reducing some of their safe revenues. As banks tried to increase revenues, another big quantity of speculative debts have in turn be agreed upon causing the excessive rise in real estate and stocks values we witnessed so far.
Over here in Europe the interest rates being already negatives, there is for our Disneyworld central bankers, only the “helicopter money” solution remaining to fight an economic severe recession.
Just in case this severe crisis go on, it is important to verify that our bank accounts (probably assets included) over here (and values in vaults ) do not exceed the guaranty limit.
I would not rely on helicopter money to save the bank deposits (exceeding the guaranty) of (average medium class people, not the richest ones who control money printing one way or another) people having some savings
Deflation is way long overdue, but it dont happen normaly in Dysneyworld .
“All these assets price collapses will again hurt the banking system.”
..And anything which hurts the cancer, benefits the host.
Tomorrow is going to be ugly. Circuit breakers kicked in on the futures market. This is reminiscent of the markets after 9/11.
Oh my lord! I know it’s only interest rates, but it’s shocking. Are we headed for negative interest rates?
had the same thought but only the little people will pay negative rates. if in doubt, ask Leona
If the FED starts another round of QE, we may see negative rates. Not deposit rates. Negative yield to maturity. The FED is going to purchase a lot of negative yielding debt.
Will the Fed buy up the fracking companies debts to keep US oil flowing?
Can the Fed buy up 401’s and pension funds to stop panic?
Australia’s prime minister is considering helicopter funds into the general public’s bank accounts. This happened during the last GFC but wasn’t overly effective. People paid down debts or bought big screen TV’s
Will be effective now, our well paid service sector will need the money to eat and pay rent
The Fed may well buy debt, but doing so only serves to keep capital cost for producers unnaturally high. Hence retards oil flow.
Firesales of already built equipment, wells and infrastructure; to whomever feels he can eke out positive cashflow at the lowest possible oil prices, is what keeps US oil flowing. Not perpetuating mandated rent seeking by useless leeches in “financial centers,” who like to preen around pretending their largely unearned wealth stem from supposed “willingness to take risk.” Well yes, buddy. You took risks. Won some, then lost some. Now go do something productive with your rent seeking, pathetic little life.
Besides the Fed, who knows what Trump and/or Congress will do as an “emergency measure” i.e., illegal but gotta do it!