This Is A Gigantic Bond Bubble

This is a gigantic bond bubble that has been inflating for decades and we do not get a free pass because we have Trump. Our economy is so screwed up, the imbalances are so enormous of decades of bad policy that we just cannot elect Donald Trump and now everything magically goes away! (10- Year U.S. Treasuries, iShares Barclays 20+ Year Treasury Bond ETF (TLT) )

The 30-Year U.S. Government Bonds Will Collapse

Donald Trump has already said that we wants to take advantage of these low interest rates, finance deficits with 30 year bonds. So if he is going to be selling all these 30-year bonds, bond prices are already falling now in anticipation of this massive supply. The Federal Reserve is not buying them, there is no more QE in place. The emerging market currencies are being slaughtered, they are not going to be buying dollars, they are starting to sell U.S. Dollars, they are going to need to sell their Treasuries.

So, if you have emerging markets central banks trying to unload Treasuries from their reserves, the Federal Reserve is not buying any and at the same time the U.S. Government trying to sell massive quantities of long term Treasuries, how can the price of those bonds not collapse?

The Bond Bubble Is Deflating

The bond market had its worse week since 2013 and it looks like a lot more carnage can come if we really break down. Yields are still low. The yield on the 10-Year Treasuries is just above 2.10 percent and the yield on the 30-Year is now above 2.90 percent. These are still low yields but they are not nearly as low as they were a while back. But what is more important is the momentum in this move and how much higher interest rates would potentially go as this bond bubble deflates.