Having pushed higher yesterday, it appears 'investors' have had a sudden change of heart and are panic-buying bonds today, despite Fed's Williams warning that:
Treasury yields are down 5bps (2Y) to 9bps (10Y) with non-stop buying since Europe opened.
30Y yield's 7.5bps drop is the biggest since Feb 18th, pushing the yield back to its 20-day moving average.
Despite unleashing his bazooka, Mario Draghi - like his colleagues at The BoJ - appears to have hit the limit of his impotence as the European Commission cut its outlook for growth and inflation across the Union for 2016 and 2017. Citing the economic slowdown in China and other emerging markets, geopolitical tensions and uncertainty ahead of the U.K. referendum on EU membership, WSJ reports EU’s economists also cautioned that the strength of factors that have been supporting growth in the region, such as low oil prices and a weaker euro, could start to fade.
We just posted a comment on the situation in the EU, where financial repression is still increasing. Big concern from my perspective is that negative rates and central bank market intervention seem to be frightening investors and convincing savers to abandon the financial system. Look at the earnings reports from UBS and the other large EU banks. Banks are 80% of the EU balance sheet and virtually all are shrinking. It is hard to envision how this situation does not end in tears for the nations of Europe given the policy mix.
Three months ago, when Australia unexpectedly revealed that its recent "stellar" job numbers had in fact been cooked we asked, rhetorically, why the sudden admission it was all a lie? Simple: weakness in commodity prices "is far greater than people had been expecting,” the nation's top economist said. Australia is now "swimming against the tide" because of uncertainties in the global economy, he added.
A few years ago President Barack Obama urged members of the European Union to admit Turkey. Now he wants the United Kingdom to stay in the EU. Even when the U.S. isn’t a member of the club, the president has an opinion on who should be included. Should the British people vote for or against the EU? The answer isn’t up to America.
What began in 1957 as the European Community (EC), or the Common Market, was a clear positive for the European peoples. It created what the name implied, a large free trade zone, promoting commerce across the continent.