DoubleLine's Jeffrey Gundlach indicated in a webcast on Thursday that financial markets are on the brink of turmoil, saying
"this is a big, big moment." He's right. It is.
The mood has shifted suddenly. Investors are losing faith in the efficacy of monetary stimulus, and it appears that perhaps central bankers
may be, too. The Bank of Japan and European Central Bank have refrained from committing to additional rounds of stimulus and are quickly running out of bonds to buy under their existing programs. The BOJ
may run out of bonds within the next 18 months, while the ECB
may run into a wall sooner than that, according to analysts cited by the Wall Street Journal and the Financial Times.
The Federal Reserve, meanwhile, is still planning to raise benchmark interest rates despite underwhelming economic data. This is in large part because policy makers are increasingly concerned about the
threats to longer-term financial stability by keeping rates so low. Meanwhile, inflation expectations are rising on bets that government officials will embark on spending plans to stimulate growth.
This multifaceted dynamic is a game changer, and markets have taken note. Traders have started dumping government bonds, leading to t
he biggest rout in Japanese debt in 13 years.
To read the entire article, go to
https://www.bloomberg.com/gadfly/ar...-puts-his-finger-on-bond-market-tipping-point
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