My dear impertinent, dear impertinent,
Like every Monday, yesterday I was with David Jacquot to talk about the bond crash in progress.
Yields on major sovereign bonds have risen again in recent days. Is the bond market about to wobble?
This is the question I tried to answer.
In fact, to summarize the situation, will the crash occur? As a good Norman, I will answer you “maybe yes, maybe no”.
In fact, everything will depend… on the partner: rate level/duration of high rates!
At this stage, the least “yielding” bonds and all those written at negative, zero or near-zero rates lose about 20%. Logic. But not all life insurance company portfolios have only negative-rate bonds, and if these managers hold the securities to the last, there will be no loss (if the borrower pays well).
No, the real issue is rate hike speed/rate hike duration.
The bet of the central banks, the great secret that has not been fully revealed is this.
Central banks know very well that no economic agent can withstand high rates for a long period.
They will then try to break inflation by raising rates much faster than usual (raising them by 0.75 instead of the classic 0.25) to raise them relatively high, perhaps to 4 or 5%, which will violently crush the world economy and trigger a violent recession. Inflation will be (in theory shattered by this brutal recession). Then central banks will quickly lower rates to ensure the solvency of individual states.
France next year of 3,000 billion euros will have “only” 270 billion to refinance (at high rates) which will increase the average cost of our debt but will not lead us to bankruptcy. If interest rates stayed high for a long time, we would be bankrupt.
I explain it to you in this video and also in the Dossier of STRATEGIES of the month of September entitled “Central banks are attacking you, turn their strategy in your favor”. Central bank policy is the key to managing your wealth over the next 24 months. If you understand what they are going to do, you can literally turn those monetary policies in your favor. This is the most important point to understand. Don’t miss the essentials. to subscribe all information can be found here. (Any subscription for the next 12 months also gives you access to all the files already published, that is, more than 80 documents and hundreds of pages of analysis and advice that allow you to put things in perspective).
It is already too late, but all is not lost.
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