We Are Staring At The Abyss Of A Credit Crunch, The Bond Market Is Basically Confirming A Lot Of Death Coming

Sovereign Bond Yield Collapse Shows the World Is in Crisis Mode

German yields closed in on record lows and those on short-dated U.K. debt neared 0% as the market braces for more stimulus from central banks.

The speed at which treasury yields are tanking is absolutely frightening. We now have a 100% chance of a 50+ point rate cut in 12 days. A >1/6 chance of a 75 basis point cut.

Treasury Yields Hurtle Toward Zero as Bets on Fed Cuts Mount: Bloomberg

Treasury yields plummeted to record lows Friday as concern about the global economic and financial impact of the coronavirus spurred demand for havens and traders amped up bets on further central bank easing this month.

Investors Withdraw Most Cash From U.S. Credit Funds in a Decade

Investors withdrew $12.2 billion from U.S. funds that buy corporate bonds and loans, the biggest weekly total in at least a decade, as the spreading coronavirus battered markets globally.


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Oh boy, the market is pricing in ANOTHER 50 basis point cut by the Fed on 3/18…

CME FedWatch

Current level = 100-125, there is a 37%21.5%0.5% chance it will be cut to 75-100, and a 63% 78.5% 99.5% chance it will be 50-75.

I do not claim to know when a crisis will occur. But if we are already at such low rates now, when it really isn’t that bad, what are we going to do when banks start going under? Is every central bank going to go negative on their rates, tens of trillions of QE?

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Oh, boy, I am super worried, this is going to be worse than 2008 because the world has far more debt and far lower interest rates than we did back then prior to the crisis. We also counted on China for our recovery the last time, but we will have no such luck this time because their economy is probably in worse shape than the US is due to demographics and a housing bubble in Beijing, Shanghai, Guangzhou and Shenzhen so large, that they easily rival the bubbles of NYC, SF, Toronto or Vancouver.

There is a 1/6 chance that they will cut to 25-50 (a 75 basis point cut)? What does the market want? Negative rates by June? Is the S&P 500 headed below 1000 points?

“Wall Street Stock Pros Fess Up: ‘We Don’t Know What’s Going On’” -Bloomberg


10 Year Treasury Yield Hits All Time Low Under 0.7%

The yield on the benchmark 10-year Treasury note sank to 0.695% around 4:45 a.m. ET, breaking below 0.7% for the first time ever.

Sequoia Capital Calls Coronavirus “the Black Swan of 2020”

The last time Sequoia did something similar was in October 2008, at the peak of the financial crisis, via its famed “RIP Good Times” slide deck. The firm is known for placing early bets on such companies as Airbnb, Google, and WhatsApp.

Demand for Fed’s Repo Loans Surges Past $100 Billion a Day

Federal Reserve Chairman Jerome Powell certainly has an odd notion of what constitutes an “orderly” market.