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Global bond yields rising ( US Debt trap)
Goldmoney ^ | 7 May 25 | Alasdair Macleod

Posted on 03/07/2025 12:20:39 PM PST by delta7

EU defence spending plans are driving German, French, and Italian bond yields higher. Japan’s are soaring too. The dollar is sinking: what does it all mean for gold and silver?

A graph.

This week, the end-February decline in gold and silver prices appear to be over, with a recovery based on a firm undertone. In early European trading this morning, gold was $2,920, up $60 from last Friday’s close, and silver $32.60, up $1.50.

Despite the recent transfers of physical gold into New York, there still appears to be a bear squeeze in place. Look at how Comex Open Interest has declined in the last few months as gold has continued to rise (upper chart):

Silver appears to have been behaving more normally until last week, when Open Interest fell significantly and the price less so. It points to a firm undertone, reflected in silver’s outperformance relative to gold in the last four trading sessions.

These are dollar prices. But the dollar weakened considerably this week against the euro and the yen, reflected in the next chart of the USD TWI.

The TWI has crashed back below its moving averages, indicating that a strong dollar is over for now, which is obviously supportive for gold and silver. But behind the dollar’s sudden weakness is euro and yen strength on the back of sharply rising bond yields in the two currencies, illustrated in the following two charts of the German 10-year bund, and the 10-year JGB.

Japanese bond yields are still too low for the inflation outlook. More concerning is the German bund, which is the marker for all the other Eurozone bonds, pushing up financing costs particularly for France, Spain, and Italy which make up the bulk of Eurozone economic activity.

Under the excuse of unexpected defence spending, Germany is raising its debt limit and increasing defence spending by a further €500bn. Additionally, Brussels is allocating a further €800bn to defence, between them inflating the amount of euro debt funding significantly at a time when inflationary pressures haven’t gone away. And all this when the ECB decided to cut rates by a further 0.25% to leave its key deposit facility at 2.5%. It could turn out to be yet another ECB error, when a eurozone debt trap suggests that rates should rise, not decline.

The concern has to be that with bond yields rising in euros and yen, strains are being imposed on the global banking system. In the last two years, US regional banks have learned not to fund long maturities out of short-term deposits. It is not clear that this message has been fully absorbed in the highly leveraged Eurozone and Japanese banking systems.

Additionally, there is increasing evidence of stalling economies, with the Atlanta Fed’s GDPNow model estimating a sharp contraction in GDP. This is next: Graph.

Just when you might expect US industry to have increasing confidence due to Trump’s trade protectionism, it is collapsing. Should this continue, all DOGE’s efforts to reduce the budget deficit will be overwhelmed by lower tax revenue and higher welfare costs. Worse still, a contracting GDP combined with rising government debt is the classic definition of an intensifying debt trap.

Putting all the evidence together, of rising government deficits in the US, Eurozone, and Japan at a time of declining private sector activity, markets are likely to wake up to rapidly increasing credit risk at the currency level. No wonder precious metals appear to be headed higher — possibly much higher — reflecting not so much an increase in their values, but currency debasement.


TOPICS:
KEYWORDS: bonds; debt; foreign
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I fully expect a huge financial crisis in the US ( and world) during his term. Do remember what happened his last term.

The good news? He will take care of our citizens first, professionally managing our decline. What will be interesting is will he abide by the Dodd Frank Act which mandates “ bail ins”?

1 posted on 03/07/2025 12:20:39 PM PST by delta7
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To: delta7

A weaker dollar is good for US exporters.


2 posted on 03/07/2025 12:23:46 PM PST by 9YearLurker
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To: delta7

I fully expect a thriving US economy with the weaker dollar helping trade tremendously and also helping to get the debt under control.

Last term covid hit...I remember NO financial crisis..just making a lot of money in the market.


3 posted on 03/07/2025 12:24:46 PM PST by dp0622 (Tried a coup, a fake tax story, tramp slander, Russia nonsense, impeachment and a virus. They lost.)
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To: 9YearLurker

and imports become more expensive.


4 posted on 03/07/2025 12:27:30 PM PST by bertmerc1 (Conservative Buddhist)
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To: All

Gold and silver have not moved that much in the last 6 months-—silver has been between 29-33$ per ounce.


5 posted on 03/07/2025 12:28:35 PM PST by DHerion
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To: dp0622

Last term covid hit...I remember NO financial crisis..
————
Not at your level. The C flu crisis wiped out hundreds of $$$ billions, and cost the world Central Banks ( some say trillions of debt issuance).

The little guys like us ( I to profited) often don’t see the big picture, until the “ waterfall effect” hits.


6 posted on 03/07/2025 12:33:01 PM PST by delta7
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To: gundog; Kenny Bania; Larry Lucido

(good for US exporters)

That’s why I focus on the exporting


7 posted on 03/07/2025 12:34:15 PM PST by SaveFerris (Luke 17:28 ... as it was in the Days of Lot; They did Eat, They Drank, They Bought, They Sold ......)
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To: DHerion

Gold and silver have not moved that much in the last 6 months
———-
HUH? Silver up 16 percent in 6 months, Gold 16.5 percent. Gold YOY 34 percent. What are you smoking?

https://goldprice.org/


8 posted on 03/07/2025 12:36:24 PM PST by delta7
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To: DHerion

i know nothing about silver. Is 33/oz good? is it down or up over the last few years?


9 posted on 03/07/2025 12:58:06 PM PST by Strict9
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To: delta7

One thing that concerns me is that desperate times call for desperate action, not just for people, but for nations! It’s how wars are started.


10 posted on 03/07/2025 1:02:33 PM PST by cuban leaf (2024 is going to be one for the history books, like 1939. And 2025 will be more so, like 1940-1945.)
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To: delta7

A weaker dollar makes imports more expensive which in turn makes domestic products more competitive which in turn drives up demand which in turn means more jobs.

Also, the weaker dollar makes exports cheaper abroad which makes demand for our products abroad even greater.

I call that win/win/win/win thank u very much.


11 posted on 03/07/2025 1:09:37 PM PST by vespa300
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To: delta7
Should this continue, all DOGE’s efforts to reduce the budget deficit will be overwhelmed by lower tax revenue and higher welfare costs.

How is getting rid of overpaid do-nothing government workers, corrupt programs, and illegal aliens going to spike the welfare costs?

12 posted on 03/07/2025 1:40:45 PM PST by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: dp0622

284 K Native Born American Jobs createdin February.


13 posted on 03/07/2025 1:52:13 PM PST by cowboyusa (YESHUA IS KING 0F AMERICA, AND HE WILL HAVE oNO OTHER GODS BEFORE HIM!)
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To: delta7

Well, Recently, the 10-year U.S. Treasury bond yields have been fluctuating. As of March 3, 2025, the yield is at 4.16%, which is slightly lower than the previous day’s yield of 4.24%. However, the overall trend has shown some ups and downs over the past few weeks.

No clear trend can be discerned from this.


14 posted on 03/07/2025 1:55:10 PM PST by SeekAndFind
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To: bertmerc1
"and imports become more expensive."

Nothing wrong with that when we are trying to build up own industrial base.

15 posted on 03/07/2025 1:57:46 PM PST by wildcard_redneck ( )
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To: delta7

“I fully expect a huge financial crisis in the US ( and world) during his term.”

In 2014 you predicted gold would hit $5000 in 2015. $2000 to go!

In 2014 you predicted a world financial collapse in 2015.

Will any of your predictions ever come true before you die?


16 posted on 03/07/2025 4:49:49 PM PST by TexasGator ('1I1.I'')
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To: delta7
"( I to profited)"


17 posted on 03/07/2025 6:13:19 PM PST by TexasGator ('1I1.I'')
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To: delta7

You can make up any price if you choose a certain period of time...6 months ago it was 35, then it dropped to 28, now its up to 32.5...when it pushes past 40 let me know...


18 posted on 03/07/2025 8:17:41 PM PST by DHerion
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To: Strict9

i know nothing about silver. Is 33/oz good? is it down or up over the last few years?
————
Silver and Gold is wealth, all else is credit ( debt), been so for 5,000 years. Currencies are for spending, PM’s for accumulating.

https://goldprice.org/

Silver up 15.5 percent last six months, 35 percent last year, 92 percent last five.


19 posted on 03/08/2025 5:09:55 AM PST by delta7
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To: TexasGator

https://www.armstrongeconomics.com/armstrong-in-the-media/interview-the-truth-about-wars-markets-and-global-power/

Yet another Armstrong interview for you. Say what you will, but the world is now taking note of his legendary computer Socrates and it’s forecasting.

You can thank me later.


20 posted on 03/08/2025 5:18:26 AM PST by delta7
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