US bond yields could soon go negative: Strategist

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CNBC: “It’s an inevitable question: Could U.S. 10-year yields turn negative now that German 10-year yields have fallen below zero for the first time ever and Japanese 10-year yields have dipped to record lows of negative 0.17 percent?

According to Dennis Davitt, partner at Harvest Volatility Management and a noted options market veteran, it may well happen.

He sees rates being driven lower by two factors in addition to overall slow global growth: Stimulative central bank policies and regulations.”

Opinion: Yesterday, chairwoman Janet Yellen showed the world that the Fed has a credibility problem. After each monthly meeting, Mrs. Yellen drones on about how the economy is improving and short term interest rates would soon rise.

lucyThen like Lucy pulling the football from Linus the Fed does nothing.

Raising rates would signal a recovering economy but as we have long suspected, a recovery based on printed money is like a house built on sand Matthew 7:24-27.

We have also long suspected that the Fed and it’s counterparts in Europe, Japan and China have been artificially holding the price of gold down for three reasons:

  • To b0ost the valve of the UD dollar to show a recovering economy
  • To show that the Fed is in control since rising gold signals trouble in the economy
  • To give China time to build it’s gold reserves to make the renminbi a world reserve currency.

As of yesterday, the first to points have failed.

  • The US economy is not growing
  • The Fed capitulated on raising interest rates until 2017

Last November, the IMF approved the renminbi to become a part of the world’s reserve currency basket to take effect on October 1, 2016.

China’s legitimacy as a global currency works to the detriment of the US dollar and it’s eventual replacement as world reserve currency.

The only way for a globalism to take hold is the elimination of a lone economic superpower,

Tick tick …

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