Are the rates for US Bonds about to go a lot higher?
At some point, yes, I think so.
There’s a proxy war going on in the Ukraine between Russia and the Western powers led by the US.
But there’s also a financial war being waged between the Western powers led by the US against Russia and also China.
This war really got going when the sanctions were imposed on Russia. The war has recently escalated. Hence this video …
One of the issues to consider is … China holds the second highest amounts of US Bonds, Japan being the first largest holder.
And China is now selling them.
This has been going on for a while.
China (and a select number of other countries) have been off-loading their US Bond holdings for a while now. It’s likely that the sell off will continue and will even probably accelerate.
In recent times, Chinese authorities have stated publicly that they’re not going to sacrifice themselves to help out the West as they did in the last Financial Crisis 2007 / 2008.
Their selling Bonds and their intent to sell more Bonds means that the price of Bonds will go down.
In accord with the Economic laws of Supply and Demand, the buying of Bonds bids up the price. And conversely, the selling of Bonds makes the price go lower.
And because there’s an inverse relationship between prices and yields for Bonds, this means that when China sells the Bonds, the price will go down and yields will rise.
For those of you who are more visually orientated, you might want to picture a see-saw in a children’s playground. So when the prices for Bonds go down, the yields go up and visa versa, when Bonds prices go up, yields go down.
But China is not alone in doing this.
Other countries are looking at ways to decouple from the US, so they’re De-Dollarising etc
This includes countries like Saudi Arabia.
Japan, another erstwhile ally of the US, might well have to start to sell also Bonds in order to defend the Yen because the Yen is in a bad state at present.
I should say that in the past, the purchase of massive amounts of US Treasuries by countries like Japan and China have kept yields low and supported the US.
But this is coming to an end. Yields are therefore rising and are going to rise higher.
It’s my belief that the FED has been engaged in a secret battle in response to this…
They’ve been battling to keep Yields down for Government Bonds, especially the 10 year yield. This operation is known as Yield Curve Control (YCC).
To describe the operation in a plain language, the FED simply buys Bonds.
It’s a Battle Royale. Yields keep on rising and so, the FED keeps on trying to get them down. But it’s being done in secret. It’s not been announced publicly. It’s also a battle that they will lose.
The other thing to say is that Bonds represent Government debt, or the indebtedness of a Government. So, by offering Bonds for sale, the Government is borrowing from the future to pay for the present. This situation is all well and good so long as the lender h
