Closing Time in a Crowded Roof Top Bar with a Small Elevator
Summary
- What is the bond market perception? reality? What drove Bund yields so low? Why is the dollar declining?
- Why are bunds and equities selling off while the Euro is rising? Why are US bonds selling off?
- We strive to answer the above questions while noting that without central bank intervention (raising rates) market forces are causing rising rates and borrowing costs.
The title might be reminiscent of a Billy Joel song, but was purloined from this apropos tweet: New York rooftop bars are rather fine things. They especially seem so after one or two (or three) martinis. The trouble comes at closing time. A small elevator has gradually taken sober patrons up 40 or so floors throughout the evening. Suddenly everyone is three sheets to the wind, and they all want to leave at once...
From the Guardian: Today's bond selloff is being fuelled by the fact the market has become quite illiquid. Investors have been piling into government bonds for many months, driving prices to record highs. Which is fine, until everyone decides the party is over and tries to leave....
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There is no cost involved and it has been our experience that if you exert control (by unchecking a box of two) over your communications settings in your Seeking Alpha profile, your email inbox will not be polluted with one bit of Spam (not even the cured pork shoulder variety. Tasty even.)
As we are now a "contributor" at Seeking Alpha, our published articles, instablog and comments can be found here. Please continue to follow The Nattering Naybob here and at Seeking Alpha. We thank you for your support.
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