{"id":35147,"date":"2018-06-16T13:17:52","date_gmt":"2018-06-16T18:17:52","guid":{"rendered":"http:\/\/olduvai.ca\/?p=35147"},"modified":"2018-06-16T13:17:52","modified_gmt":"2018-06-16T18:17:52","slug":"the-global-bond-curve-just-inverted-why-jpm-thinks-a-market-crash-may-be-imminent","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=35147","title":{"rendered":"“The Global Bond Curve Just Inverted”: Why JPM Thinks A Market Crash May Be Imminent"},"content":{"rendered":"
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“The Global Bond Curve Just Inverted”: Why JPM Thinks A Market Crash May Be Imminent<\/span><\/a><\/h3>\n<\/div>\n
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At the beginning of April, JPMorgan’s Nikolaos Panigirtzoglou pointed out <\/a>something unexpected: in a time when everyone was stressing out over the upcoming inversion in the Treasury yield curve, the JPM analyst showed that the forward curve for the 1-month US OIS rate, a proxy for the Fed policy rate<\/strong>, had already inverted after the two-year forward point. <\/strong>In other words, while cash instruments had yet to officially invert, the market had already priced this move in.<\/p>\n

One way of visualizing this inversion was by charting the front end between the 2-year and 3-year forward points of the 1-month OIS. Here, as JPM showed two months ago, a curve inversion had arisen for the first time during the first week of January, but it only lasted for two days at the time and the curve re-steepened significantly in the beginning of April.<\/p>\n

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Fast forward to today when in a follow up note, Panigirtzoglou highlights that this inversion has gotten worse over the past week following Wednesday’s hawkish FOMC meeting. As shown in the chart below which updates the 1-month OIS rate, the difference between the 3-year and the 2-year forward points has worsened, falling to a new low for the year of -5bp<\/strong>.<\/p>\n

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But in an unexpected development – because as a reminder we already knew that the market had priced in an inversion <\/a>in the short-end of the curve <\/strong>– something remarkable happened last week: the entire global bond curve just inverted for the first time since just before the financial crisis erupted.<\/strong><\/p>\n

As JPM notes, while the Fed’s hawkish move was sufficient to invert the short end further, it was not the only central bank inducing flattening this past week: the ECB also pressed lower on the curve via its “dovish QE end” policy meeting this week.<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n<\/div>\n

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\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

“The Global Bond Curve Just Inverted”: Why JPM Thinks A Market Crash May Be Imminent At the beginning of April, JPMorgan’s Nikolaos Panigirtzoglou pointed out something unexpected: in a time when everyone was stressing out over the upcoming inversion in the Treasury yield curve, the JPM analyst showed that the forward curve for the 1-month […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[20535,2267,500,4318],"class_list":["post-35147","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bond-yield-inversion","tag-jp-morgan","tag-market-collapse","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35147","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=35147"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35147\/revisions"}],"predecessor-version":[{"id":35148,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35147\/revisions\/35148"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=35147"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=35147"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=35147"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}