China, Russia and Brazil have recently been selling US Treasuries, hedging their fiscal risks and stirring volatility on Wall Street, potentially signaling a more significant slowdown in the global economy coming up.
Kristian Rouz — Several emerging markets, including China, Brazil, Russia and Taiwan, previously among the biggest buyers of US governmental bonds, have recently been selling them at the fastest pace since 1978. US bonds, commonly referred to as ‘Treasury notes’ or ‘Treasuries’ are, however, widely regarded as being among the most ‘safe haven’ assets in the financial world, meaning the emerging markets must have serious reason to cash those out for the more volatile money liquidity. Continue reading
And markets are totally unprepared
The financial markets have had a bit of a tough time going anywhere this year.
2015 stands in relative contrast to largely upward stock and bond market movement over the past three years. What’s different this year and what are the risks to investment outcomes ahead?
Markets ignored clear warnings in Europe and America that the money supply is catching fire, signalling a surge of inflation later this year
The global deflation trade is unwinding with a vengeance. Yields on 10-year Bunds blew through 1pc today, spearheading a violent repricing of credit across the world.
The scale is starting to match the ‘taper tantrum’ of mid-2013 when the US Federal Reserve issued its first gentle warning that quantitative easing would not last forever, and that the long-feared inflexion point was nearing in the international monetary cycle.
Paper losses over the last three months have reached $1.2 trillion. Yields have jumped by 175 basis points in Indonesia, 160 in South Africa, 150 in Turkey, 130 in Mexico, and 80 in Australia.