Tuesday, July 12, 2016

The Pain A 1% Spike In Rates Would Inflict
From the WSJ: "The free fall in yields on developed-world government debt is dragging down rates on global bonds broadly, from sovereign debt in Taiwan and Lithuania to corporate bonds in the U.S., as investors fan out further in search of income. Yields in the U.S., Europe and Japan have been plummeting as investors pile into government debt in the face of tepid growth, low inflation and high uncertainty, and as central banks cut rates into negative territory in many countries .. As yields keep falling in these haven markets, investors are looking for income elsewhere, creating a black hole that is sucking down rates in ever longer maturities, emerging markets and riskier corporate debt." .. what could happen: "Even a small increase in interest rates could inflict hefty losses on investors. With the 2013 'taper tantrum,' for instance, the Federal Reserve sparked a selloff as it discussed ending its bond-buying program known as quantitative easing."
LINK HERE to commentary
LINK HERE to the WSJ article

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