"The September Curse": Starting with a Global Bond Market Crash?
As the sell-off in government bonds spread to the stock market, European and U.S. markets experienced a "simultaneous slump in stocks and bonds" on Tuesday...
At the close, the S&P 500 fell 44.72 points, down 0.69% for the day to 6,415.54 points, while the Euro Stoxx 50 index dropped 1.42%. Many industry insiders noted that the decline in European and U.S. stocks was due to pressure on U.S. Treasuries and other government debts, partly driven by investor concerns over the mounting debt in many major economies.
Marija Veitmane, Head of Equity Research at State Street Global Markets, stated, "The current risk aversion stems from broader market unease in the bond market."
In fact, in an article published early Tuesday, Cailian Press had already warned investors that the recent surge in gold and silver prices had captured some of the panic shadows cast by the global bond sell-off. Overnight, the "storm" in the bond market undoubtedly spread further...
On Tuesday, the yield on the U.K. 30-year government bond closed at 5.69%, its highest level since at least 2006. The 30-year yields of Germany and the Netherlands also rose to 3.4% and 3.57%, respectively, hitting highs not seen since 2011. The French 30-year government bond yield climbed to 4.49%, its highest level since 2009. Meanwhile, the Japanese 30-year government bond yield, after reaching a new high since at least 2006 last week, remained elevated above 3.20%.
At the same time, in the U.S. Treasury market, the world's largest bond market, the 30-year yield briefly approached 5% during Tuesday's session, touching a high of 4.997%, a level rarely seen since 2006.
It can be said that in the developed bond markets of Europe and the U.S., almost every major economy has its own "skeleton in the closet"...