Bondpocolypse Continues

One thing I never hear discussed is the insider trading being facilitated by the NSA snooping and info gathering and being executed by the high-speed "Rapid Trading" computers. They make thousands of moves a second at such a speed that the normal investor cannot even comprehend it.





http://www2.blackrock.com
 
ONCE THOUGHT SAFE. NOW RISKY. RETHINK YOUR BONDS.
The traditional bond funds you once considered safe may not be so safe anymore.
Many traditional core bonds aren’t even keeping pace with inflation. And if interest rates rise or inflation picks up, these once low-risk bonds could do something they've rarely done in 30 years – lose your money. You need a different, broader approach to bond investing.


http://www.ft.com/

China debt auction failure raises liquidity fears
By Simon Rabinovitch in Shanghai
The Chinese government failed to sell all its bonds at an auction on Friday, a sign of how cash has become increasingly tight in the slowing economy.
The finance ministry sold only Rmb9.5bn ($1.5bn) of the Rmb15bn in government debt on offer, the first time in nearly two years that Beijing has fallen short of its target bond sale. The failure stemmed from a jump in money market rates that has occurred because the central bank has refused to pump liquidity into the economy despite signs of stress in the banking system.

http://www.libertariannews.org
Bond Market Failure Accelerating


As I’ve been saying for a long time now, as US debt levels reach historic highs, the bond markets will implode.
Think about this:
Interest rates are supposed to reflect the risk of an investment.
If an investment is risky, its interest rates will be high.
If an investment is a sure thing, its interest rates will be low.
This is why credit card companies charge outrageous rates to people with bad credit scores and why government bonds tend to have extremely low interest rates.
Now – the US is now at near historic highs in terms of its debt to GDP ratio, yet its bond interest rates are at historic lows.  This is completely the opposite of what we should be seeing.  We should see interest rates rise in proportion to the amount of debt issued by the US.  As the US issues more debt, obviously its risk of default rises.
The bond markets are a complete joke.  It finally appears that foreign governments are starting to catch on.
What this means is that interest rates will rise, and when they do, the US will be forced into a situation that requires it to print money in order to make the payments on the debt it owes.
Hyper-inflation will result from this.