Global central banks have been in a massively easing path. These has been conducted through various measures as QEs, (ZIRP- Negative Lower Bound) interest rates or currency (as Singapore) channels.
CBRates.com has tallied 34 rates in different countries from January to May 5. This doesn’t include central bank actions by frontier economies like Dominican Republic, Jamaica, Sierra Leone and others which recently also cut rates.
This also implies that the seeming coordinate actions of global central banks of implementing crisis resolution measures have been indicative of the health or the real conditions of the global economy.
Credit easing has been mostly touted as a tool to stimulate growth and ‘fight deflation’. However the real intent has been to push the cost of debt servicing down.
In short, global central banks continue to subsidize governments and politically favored enterprises through invisible redistribution from financial repression policies. Most of which has been coursed through interest rates
Despite all such actions, curiously though, global bond markets seem to have been pushing back! They appear to be revolting against central banks.
Yields of 10 year US bonds have recently soared.
So as with UK and German equivalent
French and JGBs as well
Major commodity exporters Canada and Australia
Singapore and Hong Kong
Taiwan and South Korea
…even the Philippines and Indonesia!
(all charts from investing.com)
Rising yields means that these bond markets have been sold off! And the selling comes in the face of sustained easing environment!
And selling pressures in the global bond markets will eventually be transmitted to bank interest rates that will increase pressures on the world’s enormous debt levels
Has the bond vigilantes returned? And if so, will the bond vigilantes prick the global asset bubbles?
Very interesting developments.
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