Loading ...Why do bond markets at home and abroad have about zero fear of a Trump/Xi agreement with positive ramifications for risk market sentiment and economic prospects (with, seemingly, receding central bank dovishness)? Because, I would posit, the collapse of bond yields is chiefly about unfolding global financial fragilities rather than trade disputes and slower growth. More specifically, faltering Chinese Bubbles significantly raise the likelihood of the type of global de-risking/deleveraging dynamic that would wreak havoc on securities and derivatives markets across the globe.
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There are key elements of the current environment reminiscent of 2007. Recall that after the initial subprime scare that pushed the S&P500 down to 1,370 in mid-August, the index then rallied back to post a record high 1,576 on October 11th.
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