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Squawk / 01 July 2016 at 8:00 GMT
Fixed Income trader / Saxo Bank
Markets are now starting to price in another easing cycle, so get ready for another round of lower bond yields and risk sentiment boost. Notable changes following Brexit and last night’s significant message of looser ECB QE rules:

• United Kingdom short end now turning negative – first time ever!
• The entire Swiss government curve is now negative as the 2064 bond has dipped below 0!
• German government bond yields are negative out to 15 years, all though bonds are underperforming today as the ECB changes focus to the periphery.
• Italian and Spanish government bonds are outperforming and yields are negative out to 3 years - first time ever!
• US 30 year yield just dipped to an all-time low of 2.21% with a single rate hike by end of 2017 priced at just a 40% chance.
fxtime fxtime
You can't help feeling that sooner or later these negative yields will be prove corrosive to finances that fund managers et al abandon them entirely and move more to commods. The result will be a colossal price drop and yield rally imho. The market is too crowded and yield is at best nil....not the ideal scenario for risk managers as cross correlation is high.
Michael Boye Michael Boye
If for that reason yields rise, I guess fund managers will find them attractive right now. Current levels may be bubble territory but nonetheless equal weight given the alternative central bank deposits - and there is currently no evidence that the latter will change. In the long run though, I agree, we are setting ourselves up for another huge crisis (


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