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Treasuries in the EU

Updated Nov 26,  2018 - The TOP of the Bond market is confirmed and Interest rates are finally bottoming out !


negative interest rates

The Bond markets are without any doubt topping out...whatever Authorities do, in the long run they can not stop rising interest rates!  Bond markets can implode in a matter of seconds...(dec 2017)

Q. Why does global debt keep growing, why does the world money supply keep expanding and why do we have REAL negative interest rates?

A. Because that is one of the few instruments left to the ECB & FED to decrease the DEBT.

British government bonds have NOT broken through their support line yet! - the weaker economies will go first: Iceland, Greece (yield +10%), Portugal (yield +5%) , Italy, Spain, Ireland, Cyprus, ...who's' next?

Example below shows how dangerous the British bond market has become. No doubt we had a BLOW OFF followed by a TOP....where soon we're gonna fall out. A similar chart for Germany. The problem is that once interest rates start to soar the action makes Bonds/Treasuries which are supposed to guarantee Fiat Money WORTHLESS.

TLT pf1

Short Term Candle  
TLT candle1
  • Jan 27, 2016: Top formation maturing but uptrend still intact
  • March 30 - April 28 - May 25: Uptrend INTACT...breakout of TOP of trend channel and rise becoming EXPONENTIAL = the beginning of the END!
  • July 12: mind the Upper Zone of the trading channel. PRESSURE on Pound Sterling is gone...
  • Aug 30: pressure on Sterling is gone and British interest rates to come down more...
  • Jan 24 - Feb 22 - March 16 , 2017: trend reversal?
  • Jan 18, 2018: ??
  • Feb 16: STOP LOSS and Confirmed TOP = expect Higher Interest Rates.
  • April 3: the Trend reversal is a REALITY...but Long Term Support still needs to be broken to confirm Trend Reversal.
  • June 23 - Sept 3: the trend is set for HIGHER Interest Rates...
  • Sep 26 - Oct 29: the trend is set for HIGHER interest rates and lower Bonds/Treasuries.
  • Nov 26: ???
Long Term Candle
TLT candle2

 

TLT candle3
A wonderful-ever-rising Bond market...coming to an end!

ʘ ʘ ʘ Euro deutsche mark bonds: TOP CONFIRMED (Feb 2018) !

DMBONDS pf1
  • September 9 - November 24, 2013 : a TOP it is.
  • January 10 - March 24, 2014 : TOP
  • May 22: Will the ECB succeed in making Interest rates NEGATIVE??
  • August 21 - Oct 20: NEW HISTORIC RECORD....
  • April 2015: German yields are almost NEGATIVE: we have a reversed situation there borrowers are rewarded and lenders punished.
  • Jan 27, 2016: Top formation maturing but uptrend still intact
  • Aug 30 - Oct 20: resuming the path towards negative interest rates.
  • Nov 11: TOP-FORMATION is MATURING
  • Jan 24, 2017: trend reversal?
  • March 16: when price PEAKS and breaks through the top of its trading channel we often have a TREND REVERSAL.
  • Oct 28 - Nov 23- Dec 28: Germany & the Deutsche Mark is the driving factor behind the EURO...and the trend of Interest rates in the EU remains BEARISH...
  • Jan 18, 2018 : we have a breakout of the 10 year German bonds and the beginning of a trend reversal.
  • Feb 16 - June 23 - Sep 3 - Nov 26: TOP CONFIRMED - expect higher interest rates. [we only CANNOT say WHEN]

 DM10 candle2

click to enlarge - 10 year Bundes Yield - note the critical days : FEB 9-11 and Feb 29, 2016

Money is created by Governments together with Banks. Money comes out of thin air, as the Central Bank creates money when it ‘buys’ TREASURIES/DEBT. New Fed money is always exchanged for debt. When the Federal Reserve writes a check, it is creating money."

Government use the Money to pay for its expenditures and tax their citizens in order to pay for the interest. Treasuries can be redeemed and by doing so the amount of money in circulation will decrease or more Treasuries/bonds can be issued and by doing so the amount of money in circulation will increase.

The so created money is used by Government to pay for its expenditures and end up as commercial bank deposits. As a result of fractional reserve banking, Commercial Banks can leverage the amount of money created by the Central bank and create even more money: Bank deposits and Bank Credit. Bank credit is a type of money that comes with an equal and offsetting amount of debt associated with it. Debt upon which interest must also be paid.

Negative interest rates : Either Banks & Governments die, either You die. If Banks & Governments die, you may also die...

This is an exponential system by its very design. All dollars/euro's are backed by debt. Debt that pays interest. Therefore, each year enough new money must be loaned into existence to cover the interest payments on all of the past outstanding debt. Or each year all the outstanding debt must compound by at least the rate of the interest on that debt.

What happens when a money system that must continually expand, by its very design, runs into the physical limits?

paying to lend

Defaults are the Achilles heel of any debt-based money system.
Without a continuous expansion of the money supply, past debts cannot be serviced, and defaults will possibly destroy the entire system.

Important is to understand that all DEBT has to be redeemed together with interest on debt and interest on interest and that INTEREST is an important factor. Interest is a multiplier factor and the lower the interest, the lower the multiplier. Negative Interest rates have a NEGATIVE multiplier factor. The question is whether negative interest rates will be able to STOP the compounded effect. Sure is they won't be able to reverse the process.

2015 Governments can not only create money but they are now also rewarded for it.

If you - even for a split second - think that Authorities and Bankers have manipulated interest rates towards ZERO and made NEGATIVE for anything else then the battle for their own survival, you're extremely naive. Governments are heavily indebted and we all are aware that the situation is far worse and will get even worse over the coming years. Negative interest rates come extremely handy as the situation not only makes it cheaper to go into more debt but it also makes repayment of the existing debt lighter. As a matter of fact Negative interest rates are a hidden debt moratorium.

Negative Interest Rates extend the lifes of the Parasites, bloodsuckers but shortens the life of SAVERS, the Entrepreneurs, of the Wealth Generators. It's a loss...loss situation

2012 the ECB is lending capital at a 1% interest rate to European banks which is used to buy local (Greek, Spanish, Italian,...) government bonds yielding 4.50% more. Or how to keep interest rates below the detonation level of 4%. 2013 the ECB started to lower to key interest rate to 0.25% (almost ZERO) because they desperately try to revive the economy...but last and not least to keep Governments, EU and ECB alive.

  • The ECB forces Italy to borrow funds at 7% and to lend these to Spain at 3%!
  • The magic/dangerous threshold is 4% (adj. April 2015). Once interest rates break though this level, the DEBT becomes uncontrollable. This threshold is over time (and because of increasing debt) coming down to 1% (actual level for Japan).
  • The European Central Bank put a floor under the euro zone by agreeing to buy unlimited quantities of bonds of any troubled member state that accepts the conditions of a bailout program. ECB President Mario Draghi made clear the bank will use all its tools to defeat anyone betting on a break-up of the monetary union.
  • The ECB values Treasuries of its member states at 29%.

What happened in Greece (and Iceland) will happen in other countries the very day the domino for that country falls. Assuming the EU builds a firewall (this is exactly what they are trying to achieve) I expect the EUROZONE domino-countries to fall together. The point of no return has been passed and it is now IMPOSSIBLE to introduce some corrective action. The ECB is daily intervening on a daily basis to contain the explosive rise of Greek, Portuguese, Spanish, Italian and French interest rates. By doing this it is destroying European savings, re-insurance co's, insurance co's and pension funds. Logic is that the economy at some point needs HIGH interest rates first so more people decide to save more and consume less. But because of fractional reserve banking and the creation of fiat money there is little logic left....


Negative yields have become fashion in 2015. They destroy SAVINGS and only serve Indebted Governments.

neg yield EU neg yield
 negative interest rates in Germany, Switzerland  negative yields in Europe
click to enlarge

 2 year german goverment debt

Germany, Ireland, Italy, Spain, France, UK - until Dec 2015
   european-bond-yields-2005-2014-bloomberg

ECB can buy unlimited amounts of Treasuries for the EU-member countries in order to keep interest rates below 6 %. Critical level is now 4%...and falling (dec 2014) !

Investors buy Italian and Spanish treasury bonds and sell these at a profit...the funds are re-invested into German Common-Investment funds, German shares,....German TREASURIES. This creates major imbalances and sabotates Draghi's actions.

Target 2 imbalances

Euro Yields, Gilts and Government bonds

Warning: Holding on to Government bonds is hazardous to your financial health. Long term Greek government bonds crashed and yield rose to +10% in only a week's time. Yield on Portuguese bonds rose to +5%...only in days time....Those holding on the Government bonds will loose 50% to 90% of their savings!!!!

eu-bond-yields-2012 greece 2-year-2015
German yields are now negative (2015) 2017

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