Escape From NIRP: Is The End Of That Hair-Brained Scheme Near?
The global bond markets are so distorted by NIRP, that Japan’s largest bank, Bank of Tokyo-Mitsubishi is preparing to give up its primary dealer role in the negative return JGB market. What little liquidity there is in that bizzare market will evaporate further.
Commerzbank – one of Germany’s largest lenders – is mulling the possibility of hoarding billions of euros in vaults as average German bund yields go negative. All very telling, all very unsustainable.
I actually think Goldman Sachs market projections are now the most prescient out there. They have turned bearish on oil here. They have upped the default rate on energy securities.
This is the GS view on rates. Keep in mind the FOMC member dots are for two or three hikes. The futures now puts even one rate hike by year end at less than 50%.
Expect the ‘Yellen call’ to be reactivated in the second half of the year, by which time our economics team expects that US growth will have pushed unemployment rates lower and core inflation rates higher. This will likely justify a resumption of rate hikes in the second half of the year, and likelyat a pace faster than is currently envisioned in the ‘dots’ offered by FOMC members.
Brexit vote is June 23 and that is the excuse being used on the dove argument. I made my election fraud view known on this in yesterday’s post.
I added another 15% to my TBF (short T-bonds) position yesterday and also picked up a partial position in SRS (inverse of IYR or real estate REIT).
I was hoping we might get lucky with a yahoo hole or two with the Balmoral Bug Lake South holes. 207 was rather marginal. 208 hit a couple narrow high grade intercepts. 209 wasn’t bad with 2-3 gram wider intervals near surface. A 20,000 meter program is ahead this summer, and there is enough going on combined with a muted stock price to play for IMHO.
Disclosure: None.