Falling Bonds, Rising Yields

Friday, January 26, 2007 | 10:00 AM

Bond prices in the US, Europe and Japan have been sliding since December. At 4.11%, European 10-year government bond yields are at the highest level since  7/6/06, while at 4.88%, US bond yields are at their highest level since 8/15/06.


Graphic courtesy of Michael Panzner

From the Fed's perspective, while falling energy prices have acted as the equivalent of rate cuts, rising yields are moving to cancel those out.

Friday, January 26, 2007 | 10:00 AM | Permalink | Comments (23) | TrackBack (0)
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This, I suspect, is the biggest story out there - and its slipping in under the radar.
If the yield rise keeps up for a couple of months longer we could be in for some fun times - particularly with the now almost comatose housing market.

What, and who, is causing this? Is it central banks rotating out of the dollar? Or is the concern over the debt finally translating into action? Or the developing nations deciding that their reserves could be more effectively, and constructively, deployed at home? Discern this flow and you'll have the keys to the kingdom.

Posted by: Bluzer | Jan 26, 2007 10:23:37 AM

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