What is the meaning of negative yield bonds

Trade wars and a slowdown in the global economy have significantly increased international investors’ demand for government bonds as a safe asset. Inversion of the US bond yield curve, as a statistically strong signal of a probable future recession in the USA, gave an additional impetus to this trend.

Comparison of the value and yield of German bonds

Demand for government bonds led to a significant decrease in their yield. However, in the world, a huge amount of bonds has a negative yield. What makes investors buy these assets? Indeed, negative rates from the point of view of common sense and the basic of economic theory are nonsense. Continue reading

Recession in the USA on the threshold – inversion of the US yield curve

The fall in yields on benchmark US government bonds (10-year) in the past few days has pulled down the entire long edge of the yield curve.


This led to the inversion of the yield curve for a plot of 2 to 5 years. What does this mean and when should we expect a recession in the USA? Continue reading

The growth of the Japanese yen on forex – this is all about US bonds

A sharp fall in the pair USDJPY (the growth of the Japanese yen) is associated with a decrease in risk appetite in the foreign exchange market.

The growth of the Japanese yen on Forex USDJPY H4

Market risk off sentiment led to demand for protective assets, including US government bonds and the Japanese yen.

The pair USDJPY broke the lower border of the rising channel and fell below the moving average for 100 hours and 100 candles for H4. Today’s fall of the pair USDJPY the strongest daily decline in more than a year. This may be the first signal to a possible reversal of the yen’s decline trend.

The yield of 10-year US government bonds fell sharply and is testing key support near the round value of 3.00%.

The fall in the yield of US government bonds

The Japanese yen (blue on the chart above) followed the yield of the bonds. We already noted in the article “Analysis of the Japanese yen (USDJPY) – a return to the historical correlation on the forex” that after the normalization of the situation on the US stock market, the Japanese yen returned to a historical correlation with the bond yield.

Such an abrupt departure from risks can be connected with profit taking by investors before today’s publication of the minutes of the last FOMC meeting. In the event that the protocols are sufficiently “hawkish”, it is able to expand the yield of bonds upward and the Japanese yen will also continue to fall on the forex market.

But, it often happens that such a sharp withdrawal of investors into defensive assets is a signal for upcoming events that carry high risks – volatility in the stock market, military conflicts, political risks, etc. The yield of government bonds is often the leading indicator of uncertainty in the world. What can be – I do not yet understand. Italy, North Korea, Iran, Muller’s investigation in the US ???? Do you remember all this talk about bonds yield curve flattering in the US and the impending financial crisis? Who knows.

We must closely monitor the news background and be prepared for high volatility in the foreign exchange market. If the avoidance of risks in the currency market continues, this can lead to gold growth. At the moment, it balances on the verge of the reversal zone after several days of consolidation near the lower boundary of the long-term rising channel.

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Is the global crisis coming? What happening with the yield curve of US bonds?

The world economy did not manage to strengthen the tendency to growth but more and more often opinions of experts began to appear about the next impending world crisis.

US Yield Curve 210418

The basis for these views is the flattening of the yield curve of US government bonds. At the moment, the yield curve looks like on the figure above. Continue reading

What means the growth of yield of US bonds to 3.0%

Yield of government bonds is a reflection of the level of expected inflation and is designed to provide large investors with risk-free income, which is minimal exceeding the existing inflation.

Yields of 10-year US bonds
The increase in the yield of US benchmark bonds in recent days means a revision by investors as expectations of the future level of inflation in the US, and the level of future interest rates. Continue reading

The most important technical chart for 2018

The new year 2018 has just come, and the world financial markets are already beginning to present surprises to us. In this case it is a pleasant surprise for everyone. On Friday, January 19, 2018, at Orthodox Epiphany, the yield on 10-year US government bonds exceeded 2.62% for the first time since 2014.

Analysis us10y-190118

This is a very important event with far-reaching consequences not only for financial markets, the forex market, the stock market, but also the economies of many countries and I will try to explain why. I have already touched on the issue of the yield of US government bonds in my articles more than once, but the uniqueness of the situation makes it necessary to dwell on this in more detail. Continue reading

China reduces the purchase of US Treasury bonds

According to ForexLive with reference to Bloomberg, Chinese officials said they recommend reducing or stopping purchases of US Treasury bonds.

Analysis US10Y-USDX

According to people familiar with this issue, officials who are considering the currency holdings of China, recommended slowing or suspending the purchase of US Treasury bonds. Continue reading

How to use the yield curve of bonds on Forex

I have written more than once about the correlation between the yield of US bonds and the Forex market. Yield curve – graphical representation of revenues on government bonds in relation to the maturity of each bond. The yield curve of bonds is a leading indicator on which it is possible to judge the future economic activity.

yield curve video

The curve of the yield curve allows an investor to analyze the relationship between bonds with different maturities. Continue reading

How long will EURUSD resist fundamental factors?

The yield of the benchmark bonds historically reflects investors’ expectations about the level of interest rates in the country. Accordingly, the spread of the yield of bonds of different countries helps to identify a stronger currency in a comparable currency pair. However, in the pair EURUSD something broke down in this fundamental connection.

Analysis EURUSD H4

Technically, the pair EURUSD is in a stable uptrend. This is confirmed by all the technical indicators. Continue reading

Silence in the US bond market is a harbinger of the storm?

The article is based on the materials of Bloomberg – “Flattening Curve Aside, Bonds Have not Been This Calm Since 1979“.

The note’s yield, which serves as a benchmark for everything from U.S. mortgages to borrowing costs for municipalities, fell in November to as low as 2.3 percent and topped out at 2.41 percent. That’s the narrowest range since 1979. Even with volatility largely suppressed, the rate has swung about 32 basis points on average every month over the past five years.

Analysis US10Y

Amazing stability, which I repeatedly noted in my posts, given the general political and economic instability in the world. So all the fun is ahead.

Correlation between US bonds yield and Forex

In the past it was short-term interest rates—and the two-year bond yield, which reflects near-term anticipated rate changes—that were most important for major currencies. The more interest it was possible to earn in a country, the more money was attracted, and the more the currency went up. The extra yield available on U.S. two-year bonds above German two-year bonds, for example, was typically tightly correlated with moves in the dollar-euro exchange rate.

Correlation between spread US and Germany Bonds and EURUSD

After more than $12 trillion of quantitative easing world-wide, currency markets are now more sensitive to the gyrations of the long-dated bonds vacuumed up by the central banks—and that makes them even harder to predict than usual. Continue reading

US Bonds 10 year yield: a triangle on the chart.

In the near future, the nearest direction of the USD movement may be decided. If we look at the 10-year yield curve of the US bonds, we will see the technical figure of the triangle. Continue reading

Flattening of the U.S. yield curve

To put it simply, the Treasury yield curve measures the spread between short- and long-term debt issued by the U.S. government.

Comparison of the yield of US bonds

It’s the extra compensation that investors demand to lock away their money for an extended period. If you haven’t been paying attention to the persistent flattening of the U.S. yield curve, you’re way behind it.

Continue reading