THIS SHOULD NOT BE HAPPENING:

The yields on bonds are skyrocketing.

We are witnessing a global and synchronized explosion in yields.

– 30-year US bonds reaching 4.9%

– 5-year Australian bonds rising more than 2%

– 10-year Japanese bonds skyrocketing

This never happens in a stable economy.

In finance, we seek correlation.

Typically, idiosyncratic risks remain local.

But that is not what is happening today.

Why are we seeing extreme statistical events across all major sovereign bond markets at the same time?

Because this has to do with the mechanics of the system.

Long-term rates say something about the credibility of the States.

That is, their ability to honor future debts without massively resorting to inflation.

Such coordinated adjustment implies that the market is no longer accepting the dominant macroeconomic thesis.

This signals internal tensions in the guarantee system..

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