Global Bond Yields Hit Lowest Level since 1996


jeffrey gundlachA gauge of global bond yields approached the all time low of 1.29 percent as investors sought safe haven under treasuries and bonds as the Euro tumbled. Many believe that stimulus measures taken by the Japanese Central bank and China over the last week are helping bond yields rally globally. Many believe that the European Central bank would introduce its own version of quantitative easing in the near future which is being seen as a pivotal reason for the sell off in the Euro today. Add to this, the political uncertainties arising out of Greece as political parties there embarked on election campaigns as Prime Minister Antonis  Samaras said that the outcome of the elections would determine the future of Greece and its association with the Eurozone has led many investors to turn towards safe haven buying in the near term. The Euro fell to its lowest level since March 2006 which is being seen as a huge negative.

Jeffrey Gundlach, founder of Double Line Total Return fund which beat 90 percent of its peers over the past three years believes that US 10-Year treasury yields could shrink further in the near term and the Federal Reserve would not raise short term interest rates any time soon. In an article published on the Barrons’ website, Gundlach believes that the falling crude prices are pushing the world towards a deflation and there he doesn’t see any interest rate hike in the near term.

Many investors and analysts on the street believe that Bonds would continue to rally in 2015 and equities might come under pressure as many unwind from risk positions and take positions in risk-free instruments like bonds going forward. Crude prices on the other hand broke below the $54 level which is seen as a breakdown on the technical charts.



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