Monday, November 24, 2014

Spanish 10-Year Yield Daily Chart Under 2% for First Time in History

The Spanish 10-year yield drops under 2% for the first time in history. ECB President Draghi promises sovereign (government) bond purchases which is no easy feat under the ECB that is an 18-member consortium. The Fed in the States can print money at will. Ditto the BOJ in Japan since their central banks are the sovereign government. The ECB will have to choose certain bond purchases in some countries at the expense of other countries. Good luck to Draghi herding those kittens. Nonetheless, European notes and bonds are well bid today (higher prices lower yields).

As long as the European yields are low, the US Treasury yields will likely stagger sideways and even perhaps leak lower. Global deflation is a concern although the near universal consensus by analysts and traders is that deflation is no worry whatsoever and instead it is simply a matter of if inflation occurs tomorrow or the next day.

Traders are anticipating Draghi to announce a sovereign bond buying program as soon as next Thursday, 12/4/14, hence the run-up in prices and drop in yields today. The German bund yield is near historic lows at 0.78%. The France 10-year is 1.12% teasing down towards the 1% level. The US 10-year yield slips under 2.31%. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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