Violent bond moves signal tectonic shifts in global markets

‘It is absolute pandemonium in the fixed income markets. Everybody has been trying to get out at the same time but the door is getting smaller,’ says RBS

A wave of turmoil is sweeping through sovereign bond markets, setting off the most dramatic gyrations seen in recent years and threatening to spill over into over-heated equity markets.

Yields on German 10-year Bunds spiked violently by almost 20 basis points to 0.78pc in early trading on Thursday as funds scrambled to unwind the so-called “QE trade” in Europe, with powerful ripple effects reaching Japan, Australia, Brazil and even US Treasuries.

“It is absolute pandemonium in the fixed income markets,” said Andrew Roberts, head of European credit at RBS. “Everybody has been trying to get out of long-duration positions at the same time but the door is getting smaller.”

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Europe’s dream of toppling dollar fades as Asian Tigers dump euro

The share of euros in the world’s rising powers’ reserve holdings has fallen to its lowest level since 2002, dashing hopes that the single currency will soon challenge the US dollar for global primacy.

“There aren’t many places to go in this ‘ugly contest’ if you don’t like the euro, dollar or yen,” said HSBC’s David Bloom. Continue reading