Negative real yields are falling again, and getting more media coverage this time. Is the narrative shifting from inflation hysteria to stagflation anxiety?
Low Yields in 5 year Note auctions are lower by about 60 basis points since March. This indicates that the UST shortage is spreading to the rest of the curve!
Skyrocketing use of reverse repo with the Fed is a matter of collateral scarcity. Is this corroborated by investor demand at US Treasury auctions?
If you were offered an investment that returns -0.70% after two years, would you take it? No! Yet that’s what German 2 year bonds are trading for. Why?
What are the true consequences of QE? More frequent liquidity events, short term rates at 0%, dysfunctional repo, and a more fragile system; that’s what.