A wave of turmoil spreads in sovereign bond markets, threatening to affect the shares.
The yield on German debt with 10 years maturity jumped by almost 20 basis points on Thursday. The market is confused by the effect of quantitative easing in the eurozone, and the waves of uncertainty reach Japan, Australia, Brazil and even the United States.
“It’s absolute chaos markets fixed income,” he told The Telegraph Andrew Roberts, director at RBS for Europe. “Everyone is trying to get out of long-term debt position, at this same time, but the exit door is getting smaller.”
After yields on German debt jumped yesterday as it plummeted. Such movements generally are extremely rare in government bonds. Recently, however, they seem commonplace.
Investors lost almost half a trillion dollars of paper for two weeks, a stunning amount of asset class, which is traditionally used to store value.
French, Italian, Spanish and Portuguese bonds were subjected to sales, which completely erased the effect of quantitative easing worth 60 bn. Euros per month, started in March by the European Central Bank.
The question is whether sales of debt associated with increased security, confidence in economic growth and inflation expectations or due to different reasons?