Bond Market Meltdown Continues With No Buyers – Bitcoin Magazine

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Looking For The Marginal Bond Buyer

Where are the bond buyers? As central banks around the world continue their attempts to wind down balance sheets, there is declining demand for sovereign debt everywhere you look. In fact, the Bank of England (BoE) was forced to buy more bonds this week, a continued expansion that is a clear sign that right now central banks have been (have to be) the only marginal buyer in the room.

Every day we check sovereign debt yields; every day they are going higher. The only dynamics that have taken yields lower or kept them flat in the short term is the announcement of interventions from the BoE, BoJ and the ECB. So far, these efforts have shown to provide only temporary relief. We’re likely to see all “temporary” liquidity injections become more long-staying policies as larger-scale issues (like the insolvency risk to United Kingdom pension funds) come to the surface. Central banks still seem adamant on using rate hikes until inflation is much closer to their 2% targets, so we could easily see restrictive rates continue while at the same time see central banks abruptly purchase bonds as various liquidity crises arise.