Morning Report – Global Bond Yields plummet 1/23/15

Posted on January 23, 2015 by Brent Nyitray

Global stocks and bonds are continuing their post ECB rally. It is truly stunning to see bond yields where they are. If you think the US 1.83% bond yield is rock bottom, consider this: It is higher than 3 out of the 5 PIIGS (only Greece and Portugal are higher) and is multiples higher than many G7 yields.

Some global 10 year yields:

France 10 Year Govt Bond Yield 0.54%
Germany 10 Year Govt Bond Yield 0.38%
Swiss 10 Year Govt Bond Yield -0.22%
UK 10 Year Govt Bond Yield 1.49%
Japan 10 Year Govt Bond Yield 0.23%
Canada 10 Year Govt Bond Yield 1.52%

We live in truly extraordinary times. Yes, the German Bund is pushing towards Japanese yields. Rates are negative through 7 years in Germany right now, and you’ll pay 22 basis points per year to lend to the Swiss government for 10 years.That’s not an interest rate – it is a storage fee.

With the ECB out of the way, attention turns to the Greek elections and the possibility (again) of Grexit.

King Abdullah of Saudi Arabia passed away last night. Oil markets are taking the news in stride, as it probably will not affect OPEC policy.

Existing Home Sales rose to a seasonally adjusted 5.04 million in December, from a downward revised 4.92 million in November. The median home price rose 5.3% year-over-year to $208,500.

In economic news, the Chicago Fed National Activity Index fell by a lot in December to -,05 from .73 in November. Production indicators drove the decline, however employment is still positive. It is looking more and more like we took a bit of a swoon in December economically, given what we have seen with the ISM numbers and the Industrial Production numbers.

The Index of Leading Economic Indicators rose from a downward-revised +0.4% to +0.5% in December.

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