I previously posted what seemed as a seminal appearance by the bond vigilantes early May 2015. This was led by a massive selloff in German bunds
The global bond market rout was placed on the freezer when ECB's Benoit Coeure indicated that the European central bank will frontload the QE program.
The initial bond market seizure reportedly signified some $456.4 billion of losses according to Bloomberg.
After a lull, last night at a news conference following the ECB's policy meeting, ECB President Mario Draghi promised more stimulus stating that "We’ve still got a long way to go".
Apparently this had led to a seeming dissatisfaction in the marketplace enough to fire up a bond selling frenzy which ushers in the return of the bond vigilantes.
This is the 10 year US Notes which responded to events in Europe.
The German and French equivalent just crashed! Crashing bonds remain an ongoing dynamic as of this writing.
Europe's crisis plagued economies (Portugal, Spain and Italy) were not spared.
The yield of 10 year JGB equivalent has likewise spiked! Rising yields will tighten the screw on Abenomics.
The bond vigilantes landed on Asia...
Singapore and Hong Kong's 10 year bonds have tumbled.
The Australian and Taiwan contemporary also got smoked
Bonds of the ASEAN majors has also been bludgeoned. (all charts above are from investing.com)
Interestingly, ASEAN currencies (see above from Bloomberg) seem to be taking a significant beating today.
Indonesia's rupiah via, as of this writing, appears to have crashed to a NEW all time LOW! In the context of USD-IDR, this makes a new all time high!
Philippine bonds have yet to reflect on the current phenomenon.
If soaring yields translate into significantly higher lending costs, then how will these affect asset markets of the world and or global economies heavily dependent on debt?
Yet how will sustained weakening of ASEAN currencies affect her overseas debt exposure, as well as, internal prices (influenced by imports) that will likely spillover to the assets and the economy?
Record stocks in the face of the record imbalances at the precipice.
No comments:
Post a Comment