The renewed implosion, or better call it the crash, in global yields is “impressive”! The move in yields looks like a small cap stock having profit warned and everybody is hitting the exit at the same time.
The economy is not doing well, inflation is dead, so the fundamental reasons for yields lower is valid, but the move is so extreme it is risking to start affecting truly big portfolio reshuffling.
US 10 year is breaking below the “magical” 2% level as the move lower accelerates.
German 10 year is in full inverted parabolic mode. Note the German 10-year yield hitting the ECB deposit rate today, -0.4%! This is not a healthy sign.
Spanish 10-year yield has crashed from 1.7% this autumn to now trading at 0.22%, setting new lows on a daily basis. Bear in mind, Spain is the best growing economy in the Eurozone….
I visited Rome in late May, since then the Italian 10 year has gone from 2.75 to now trading at 1.75%, a whole 1 percentage (100 bps) move lower in yields, truly amazing.
Where yields will head to next nobody knows, but the convexity level is surely kicking in. Watch all yields closely here, as any sudden move could spill over to other assets.
Source, charts by Bloomberg