Categories: Base Metals / Energy / General Market Commentary / Precious Metals
Topics: General Base Metals / General Energy / General Market Commentary / General Precious Metals

How Bad Will the “Bond Massacre” Get?

How Bad Will the “Bond Massacre” Get?

Worse “than the 1994 ‘Bond Massacre,'” with “sustained double-digit losses on bonds, subpar growth in developed markets, and balance sheet risks for banking systems….”

The backdrop: after 36 years of bond bull market, the amount of US bonds has ballooned to $47 trillion, up 24% from just ten years ago:

US Treasurys ($19.8 trillion),
Municipal bonds ($3.8 trillion)
Mortgage related bonds ($8.9 trillion)
Corporate bonds ($8.6 trillion)
Federal Agency bonds ($2 trillion)
Money Markets ($2.6 trillion)
Asset backed Securities ($1.3 trillion)
Bonds dwarfs the US stock market capitalization ($27 trillion). Bonds are a global phenomenon with even bigger bubbles elsewhere, particularly in NIRP countries, such as those in Europe, and in Japan. That’s why bonds matter. They’re enormous. And the damage they can do to investors is huge.

So how bad might the next bond bear market get? Paul Schmelzing, a visiting scholar at the Bank of England and an academic at Harvard where he concentrates on 20th century financial history, published an unpleasant scenario on the Bank of England’s blog. He doesn’t mince words:

To continue reading please click link http://wolfstreet.com/2017/01/04/how-bad-will-the-bond-massacre-get/