{"id":38718,"date":"2018-10-04T13:04:29","date_gmt":"2018-10-04T18:04:29","guid":{"rendered":"http:\/\/olduvai.ca\/?p=38718"},"modified":"2018-10-04T13:04:29","modified_gmt":"2018-10-04T18:04:29","slug":"liquidity-crisis-looms-as-global-bond-curve-nears-the-rubicon-level","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=38718","title":{"rendered":"Liquidity Crisis Looms As Global Bond Curve Nears “The Rubicon” Level"},"content":{"rendered":"
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Liquidity Crisis Looms As Global Bond Curve Nears “The Rubicon” Level<\/span><\/a><\/h3>\n<\/div>\n
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The first half of 2018 was dominated by tighter global financial conditions amid the contraction in Global $-Liquidity, <\/strong>which resulted in the stronger US dollar weighing heavily<\/strong> on the performance of risks assets, particularly EM assets.<\/p>\n

GLOBAL BOND YIELDS ON THE MOVE AMID TIGHTER GLOBAL FINANCIAL CONDITIONS <\/strong><\/p>\n

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Global bond yields are on the rise again, led by the US Treasury yields, which as we have highlighted in numerous reports, is the world\u2019s risk-free rate.<\/strong><\/p>\n

The JPM Global Bond yield, <\/strong>after being in a tight channel, has now begun to accelerate higher. There is
\nscope for the JPM Global Bond yield to rise another 20-30bps, close to 2.70%, which is the \u2018Rubicon level\u2019 for global financial markets, in our view.<\/strong><\/p>\n

If the JPM Global Bond yield rises above 2.70%, the cost of global capital would rise further, unleashing another risk-off phase. <\/strong>Our view is that 2.70% will hold, for the time being.<\/p>\n

We believe the global bond yield will eventually break <\/strong>above 2.70%, amid the contraction in Global $-Liquidity.<\/p>\n

GLOBAL LIQUIDITY CRUNCH NEARING AS GLOBAL YIELD CURVE FLATTENS\/INVERTS <\/strong><\/p>\n

A stronger US dollar and the global cost of capital rising is the perfect cocktail, in our opinion, for a liquidity crunch.<\/strong><\/p>\n

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Major liquidity crunches often occur when yield curves around the world flatten or invert. Currently, the global yield curve is inverted; this is an ominous sign for the global economy and financial markets, especially overvalued stocks markets like the US.<\/p>\n

The US economy remains robust, but we believe a global liquidity crunch will weigh on the economy. <\/strong>Hence, we believe a US downturn is closer than most market participants are predicting.<\/p>\n

GLOBAL VELOCITY OF MONEY WOULD LOSE MOMENTUM <\/strong><\/p>\n

The traditional velocity of money indicator can be calculated only on a quarterly basis (lagged). Hence, we have developed our own velocity of money indicator that can be calculated on a monthly basis.<\/p>\n

\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":"

Liquidity Crisis Looms As Global Bond Curve Nears “The Rubicon” Level The first half of 2018 was dominated by tighter global financial conditions amid the contraction in Global $-Liquidity, which resulted in the stronger US dollar weighing heavily on the performance of risks assets, particularly EM assets. GLOBAL BOND YIELDS ON THE MOVE AMID TIGHTER […]<\/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":[22117,6697,22114,22116,22115],"class_list":["post-38718","post","type-post","status-publish","format-standard","hentry","category-economics","tag-global-bond-curve","tag-liquidity-crisis","tag-mehul-daya","tag-nedbank","tag-neels-heyneke"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38718","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=38718"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38718\/revisions"}],"predecessor-version":[{"id":38719,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38718\/revisions\/38719"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=38718"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=38718"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=38718"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}