Loading ...It could also be related to the Bond mkt and what happens when negative yielding Bonds start to rise in rates,,,basically the haircuts will be monstrous…
See that Armstrong post that R 640 put up….
What has transpired is the buyers of these negative bonds have been simply traders. They have not bought this stuff to actually hold to maturity. They have been happy to trade them assuming rates would continue lower so it would be a bond rally. We are looking at SERIOUS credit risk once again but instead of the time bombs being mortgage-backed securities, this time it will be negative-yielding bonds issued by governments. The bond markets have been converted into a child’s game of musical chairs. When the music stops, someone will be left holding negative-yielding bonds that will only be salable at even deeper discounts of perhaps as great as 50% in a few years.
Rates rose this week…but that is just a small taster of what happens when $ Trillions of Bonds go up in smoke !!!!!!