Lynette Zang: The Next Collapse, Signaled by the Bond Market

ITM Trading, Released on 2/2/18

Something is going on in the global bond market and it doesn’t look good for most of the other markets. In the US Treasury market, yields have broken above resistance levels not seen since 2014 respectively and we’re seeing similar moves in the global sovereign bond markets.
There are many reasons interest rates matter, today we’re going to look at three of those reasons.
First is the debt that was taken on with interest rates near zero that now has to be rolled over at higher rates.
Secondly central bankers knew that if bond interest income was taken away from savers, they would take on more risk in a reach for yield. Particularly if stock dividends were paying more than bonds, thus we have the most expensive stock market in history.
In February, that seems to be changing. As interest rates are hitting levels not seen since 2014 and earlier, global stock markets are falling.
Which takes us to the third topic, all those opaque derivatives bets which dwarf all markets combined. From the most current OCC report on derivatives in the FDIC banking system, we can see that banks are leveraged 24.7 to 1, derivative bets to assets. Keep in mind that bank “assets” include your deposits, brokerage accts. etc. and the bail-in laws are in place.
As a reminder (think Cyprus 2013 and Greece 2015) when a bank becomes insolvent they have the right to halt or control withdrawals. In Cyprus, capital controls were in place for roughly 2 years and in Greece, they are still in place.
The real reason central bankers are attempting to raise interest rates at this time is to have the ability to lower them when the next crisis hits. In the US, going back to the early 1980’s, interest rates were lowered to “stimulate” the economy an average of 6.5%., so when the next crisis happens, central banks are most likely to plunge us into negative rates. Nor does their balance sheet have enough room to take on more debt to mask this next crisis. Debt fiat system over.
So what can you do? Be prepared to be as independent as possible, so my mantra; food, water, energy, security, community, barterability and wealth preservation.
History proves that physical gold and silver in your possession protects wealth and positions opportunities better than any other asset. That’s why those that understand money own gold and silver.
Lynette Zang has held the position of Chief Market Analyst at ITM Tradingsince 2002. Ms. Zang has been in the markets on some level since 1964. Her mission is to convert financial noise into understandable language. She has been a banker, a stock broker and studied world currencies since 1987. She believes strongly that we need to be as independent as possible and at the same time, we need to come together in community in order to survive and thrive through the hyperinflation she sees in the near future.