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Bonds - getting ready to crash

10% rates will come fast -M.A

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#1 Russ

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Posted 27 May 2018 - 02:44 AM

Europe has painted themselves into a corner and rates are going to rise fast according to armstrong, my chart agrees. Once rates rise fast governments will not be able to service their debts and the debt crisis will unfold, once confidence is lost that is when gold will move up strongly, likely after the next major pi cycle low in 2020. economic-confidence-model.png

 

"Where does renowned financial and geopolitical analyst Martin Armstrong see big trouble brewing? Look no further than the bond market. Armstrong explains, “The bond market is going down. . . . We’ve already started into it. . . .You have to understand both Japan and Europe have destroyed their bond markets. They have completely and utterly destroyed them. They are the buyers. That’s it. There is no pension fund that can buy 10-year paper at 1.3% when they need 8% to break even. They are locking in a 10 year loss. They can’t do it. We have been helping major funds shift into equities because it is the only place they can go. . . . Once you start seeing the cracks in Europe, you are going to see interest rates rise faster than you have ever contemplated in your life. There is nobody in their right mind that can buy an Italian bond at 1.3%. It’s just not going to happen. Once the ECB is forced to stop, those rates are going to jump to 10% instantaneously. Once it starts to crack, that’s it, it’s gone. What is going to make everyone know it is cracking is when you see rates going up dramatically, and the ECB is at a point it just can’t buy any more.” Armstrong does not see a big War in the near term, but one is brewing in the Middle East. What Armstrong does see right now is “increasing civil unrest.” On gold, Armstrong sees the yellow metal “fighting a stronger dollar” but predicts it will have its day sometime after 2020 to 2021." Join Greg Hunter as he goes One-on-One with financial and geopolitical expert Martin Armstrong. - decription for latest youtube video posted May 19, 2018

 

 

"Nulla tenaci invia est via" - Latin for "For the tenacious, no road is impossible".
"In order to master the markets, you must first master yourself" ... JP Morgan
"Most people lose money because they cannot admit they are wrong"... Martin Armstrong



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#2 Rich C

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Posted 27 May 2018 - 11:51 AM

Russ, good article!  This is my major concern going forward.  In my lifetime (66 years), one observation is that when economic bubbles burst the economy is destabilized and those who took positions in assets near the top of the bubble get hurt real bad.  Recently we've been through the dot com bubble of the late 90's that led to a 3 year bear market 2000-2002, the housing bubble that led to a short but devastating stock market crash in 2008-2009, and it appears to me we are now in a bond market bubble created by the Fed response to lack of fiscal control by congress (and the financial crisis of 2008).

 

I don't know when it will pop, but when it does, I expect to see pain.

 

I note it in my blog each month in the "Long Term" monthly update (you can scroll down to the one for May), at the bottom of the article it is called "Long Term Issues to Keep in Mind".  Warren Buffet does not talk about a bond bubble, he just says and has said for at least 5 years that bonds are a terrible investment right now.

 

The Fed is trying hard not to let rates rise too fast, by such slow and small increases in the Fed funds rate.  So far they are doing a marvelous job, with short term rates up 1.5% while the 30 year bond is only up .7%.  When will investors demand more than 3% for a 30 year bond?


Blogging at http://RichInvesting.wordpress.com

 

My swing trades typically last a couple of weeks to a couple of months and I focus on SPY.


#3 cycletimer

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Posted 28 May 2018 - 08:36 AM

The one prudent thing we can do with our fixed income is ladder CD maturities. Rates are rising so rapidly on the short end that one can simply roll into a new CD every 3 mo’s. That’s what I’m doing. I purchased 3, 6, 9 & -2 mo CD’s and every 3 mo’s when one is maturing I roll it out another 12 mo’s and it’s amazing how much more this new rate has increased in only 3 months from the last time I rolled.
My early retirement journey (blog): https://firechecklist.net/

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#4 cycletimer

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Posted 28 May 2018 - 08:37 AM

Russ, good article!  This is my major concern going forward.  In my lifetime (66 years), one observation is that when economic bubbles burst the economy is destabilized and those who took positions in assets near the top of the bubble get hurt real bad.  Recently we've been through the dot com bubble of the late 90's that led to a 3 year bear market 2000-2002, the housing bubble that led to a short but devastating stock market crash in 2008-2009, and it appears to me we are now in a bond market bubble created by the Fed response to lack of fiscal control by congress (and the financial crisis of 2008).
 
I don't know when it will pop, but when it does, I expect to see pain.
 
I note it in my blog each month in the "Long Term" monthly update (you can scroll down to the one for May), at the bottom of the article it is called "Long Term Issues to Keep in Mind".  Warren Buffet does not talk about a bond bubble, he just says and has said for at least 5 years that bonds are a terrible investment right now.
 
The Fed is trying hard not to let rates rise too fast, by such slow and small increases in the Fed funds rate.  So far they are doing a marvelous job, with short term rates up 1.5% while the 30 year bond is only up .7%.  When will investors demand more than 3% for a 30 year bond?


NICE BLOG RICH. I’m going to subscribe to it.
My early retirement journey (blog): https://firechecklist.net/

Twitter: @MrFireby2023

#5 gannman

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Posted 29 May 2018 - 03:30 AM

interesting thing here is the dollar is showing strength and gld is holding up 

 

also 2020 just seems like a long time to me if its topped and i dont know if it has

 

(it being bonds) i personally dont think we are waiting until 2020 to see fireworks

 

just opinions


feeling mellow with the yellow metal


#6 K Wave

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Posted 30 May 2018 - 07:59 AM

That reversal back above 118 on TLT stick saved the bonds for now.  I could see TLT stalling out anywhere from 122-125.

 

Next time 118 is breached, I would expect full scale carnage....



#7 Rich C

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Posted 30 May 2018 - 09:32 AM

That reversal back above 118 on TLT stick saved the bonds for now.  I could see TLT stalling out anywhere from 122-125.

 

Next time 118 is breached, I would expect full scale carnage....

 

I bought a little TBT yesterday, for a trade.  Will consider adding to it if it starts heading back up slowly.  I was too early in my belief that long term rates would head higher and I still have a mark to prove it (as in "that's gonna leave a mark!").  Eventually the market will do what its supposed to do, but the question is always "When?".


Blogging at http://RichInvesting.wordpress.com

 

My swing trades typically last a couple of weeks to a couple of months and I focus on SPY.