Wednesday, August 07, 2019

We are in Wile E Coyote territory now.

10-year yield drops under 1.6%, 30-year yield nears record low as collapse in rates accelerates.

Back on July 18 when I first heard that the US could fall into negative interest rates (in comments) - I thought that was a slim possibility. Not zero. Just slim. Now this is looking more like a real possibility.  Which is quite unbelievable. We came super close under Obama. But never quite hit it. And I don't really think anyone on this earth knows what happens in that environment. The dark cloud of the rest of the world is finally hitting our shores.

There are 10 countries with inverted yield curves. Mexico - Hong Kong - Canada -US - UK - Norway - Japan - Singapore - New Zealand - Germany.

Even more troubling is that when the US lowered it rates - like 3 or 4 countries immediately lowered their rates. So, more countries could fall into this negative rate scenario.

It's really the weirdest world. No one is losing anything (so far), but the numbers look as bad as the Great Recession. Which means, things are going to get worse than the Great Recession before people wake up and figure this out.


leaperman said...

she said: said...

Interesting point. I don't really hold much concern about the ag tariffs. China has a lot of people to feed. But these other countries are not in a trade war with China. Why are they so weak?