Bill Blain: “Something Is Happening In Europe And We Don’t Know What It Is…”

We start with the overnight observations by Mint’s Bill Blain who points out something contradictory: on one hand Europe is said to be “fixed” with inflation expectations rising and the ECB preparing to take its foot off the gas pedal. On the other hand, “European Sovereigns will start issuing long bonds again…. A French 30yr is in the works, Italy and Belgium are both looking, while other rumours say the EFSF might be in the frame. … Long dated low yield bonds make great sense when inflationary expectations are low into infinity, and you expect the New Normal of Low Rates in perpetuity to hold for ever.”
As he puts it, ” If the global economy is so rosy, why is the Euro bond market going long? Whatever happened to expectations Europe was going to grow again? Something is happening and we don’t know what it is…”
Perhaps what is going on is that the market is looking beyond the current “reflation” scare, and already preparing for the next deflationary downturn, now that China’s credit impulse has fizzled and the impact is set to hit the world in the coming months…
In any case, read on from Blain’s Morning Porridge – May 11th 2017

This post was published at Zero Hedge on May 11, 2017.