Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Bond jitters putting markets in 'completely new light', BIS says

EconomyMar 01, 2021 07:10AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Dividers are seen inside a trading post on the trading floor as preparations are made for the return to trading at the NYSE in New York

By Marc Jones

LONDON (Reuters) - The swift rise of borrowing costs on global bond markets over the last month could completely alter the outlook for financial markets, according to the central bank for the world's central banks, the Bank for International Settlements.

In its latest quarterly report, the Swiss-based BIS also noted how wild retail trading-driven swings in stocks such as GameStop (NYSE:GME) recently had helped whip up volatility.

The big shift however has been in the U.S. Treasury markets that tend to propel global borrowing costs on the sense that unprecedented stimulus will ignite inflation if COVID-19 vaccines allow economies to fully reopen this year.

Benchmark 10-year U.S. yields climbed above 1.6% last week, extending this year's near 70 basis-point jump that has jacked up sovereign borrowing costs in Europe, Japan and elsewhere.

"The recent market jitters confirm that the back-up in bond yields and reflation trade are casting the financial market outlook in a completely new light," said Claudio Borio, Head of the BIS' Monetary and Economic Department.

"People just saw low rates for as far as the eye could see, whereas now they have started having doubts about how long these conditions would last."

Economists have drawn parallels to the 2013 taper tantrum, when bond yields rose dramatically after then-Fed Chair Ben Bernanke told lawmakers the Fed could take a step down in its pace of purchases of assets that had been buoying markets.

Borio said the key to whether markets would have another lengthy tantrum was firstly dependent on whether world growth did accelerate quickly, and then also what the major central banks did in response to rising bond yields.

Current Fed Chair Jerome Powell gave assurances last week the bank was not about to dial down stimulus. ECB President Christine Lagarde has delivered a similar messages, but the United States has just agreed a new $1.9 trillion stimulus package.

Central banks "will have to work out what the implications of that (rising bond yields) for their objectives and respond accordingly," Borio said, referring to mandates to curb inflation and keep financial markets from running out of control.

On the wild stock market moves this year, he said it was typical of retail investors getting involved during periods of euphoria.

"Whenever a taxi driver starts talking about what is happening in the stock markets it means something significant is going on," Borio said.

For full report click https://www.bis.org/publ/qtrpdf/r_qt2103.htm

Bond jitters putting markets in 'completely new light', BIS says
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email