Open Madness in Global Bond Markets: Got Gold? by Matthew Piepenburg

It’s inevitable that sovereign bond markets of bankrupt sovereigns will fall apart. From Matthew Piepenburg at goldswitzerland.com:

The slow but steady implosion of global bond markets is no longer a debate but fact. Knowing this, investors can better brace themselves for the policy and market reactions to come.

Below, we once again follow the patterns of math and cycles (as well as the open failure of policy makers) to foresee the direction of risk assets, currencies and gold.

The End of Negative Yields: Anything but a Good Sign

Recently, Bloomberg happily announced that the era of “negative yielding” (which technically means “defaulting”) USD bonds is over as yields are now “nominally positive.”

Global bond markets

“Great news!” they tell the huddling masses.

Nothing, however, could be further from the truth.

Let me repeat that: Nothing could be further from the truth.

Yields are only outpacing already embarrassing inflation metrics because bond prices, which move inversely to yields, are tanking in a world which no longer wants or trust USD-based IOUs.

In other words: All this means is that bonds are tanking and inflation is roaring at the same time.

Great news?

Furthermore, this so-called “return to normalcy” in positive nominal yields is in fact a neon-flashing sign (or needle) pointing toward the end (and bursting) of a global debt bubble in government bonds.

What’s worse, and as the following graph makes objectively clear, is that it’s not just sovereign bonds that are tanking, but the entire credit asset class, from CMBS to Investment Grade.

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