Government Bond & Mortgage ‘Meltdown’ Crushes NIRP

Jon Blogosphere, Economy, Fiscal Policies, Government, Market Commentary, Real Estate

And the spike in mortgage rates will come in handy. The situation in government bonds – variously labeled with ‘bloodbath,’ ‘rout,’ ‘carnage’ ‘meltdown,’ or similar propitious terms – continued on Thursday.
Already in November – so not counting the ‘carnage’ today – the Bloomberg Barclays Global Aggregate Total Return Index lost 4% or $1.7 trillion, according to Bloomberg, ‘the deepest slump since the gauge’s inception in 1990.’
While global stocks rallied in November, the gains – $635 billion – were outright puny compared to the $1.7 trillion wiped out in the much larger bond markets.
On Thursday it got worse. It started in Europe where government bonds got crushed after speculation surfaced that the ECB might not keep buying bonds until hell freezes over, that in fact it might begin tapering its QE program as soon as next year. The markets were aghast.

This post was published at Wolf Street on December 2, 2016.