This is a syndicated post, reposted with the permission of the publisher. Original viewable here.
Liquidity moves markets!Follow the money. Find the profits!
SIFMA has an excellent chart documenting the explosion of debt issuance since 1998 that amped-up with The Fed’s intervention in 2008.
Despite the massive growth of long-term debt (with correspond high duration risk), the interest rate volatility cube is showing calm seas … except at the short-end of matures .. and now the long-end is starting to show more volatility.
Is it my imagination, or do those volatility spikes look like shark fins??
The Fed Funds Futures market is showing 1-2 Fed Funds rate cuts for the next two meetings.
And the expected future outcomes are pointing in the downward direction.
Even Austria is showing a steep decline in their 100-year bond yields.
While it is seemingly all quiet on the bonds front, volatility is emerging at both ends of the maturity curve. HEDGE!!!!