Beware The Great Unwind And Full-Blown Collapse That Is Coming

Investors around the world need to beware of the Great Unwind and full-blown collapse that is coming which will devastate most people.

Beware the great unwind
August 10 (King World News) – Alasdair Macleod:  This chart below strongly suggests that US Treasury bond yields, widely regarded as the risk-free yardstick against which all other credit is measured are going significantly higher, not stabilising close to current levels before going lower as commonly believed. I conclude that US Treasury bond yields could easily double, and the political class will be powerless to stop them going even higher. The implications for interest rates globally are that they will be forced considerably higher as well.

This article concludes that reasoned analysis takes us to this inevitable conclusion. It is consistent with the end of the post Bretton Woods fiat currency era, and the return to credit backed by real values. 

The collapse of unbacked credit’s value was only a matter of time, which is now rapidly approaching. The Great Unwind is under way. It is the consequence of monetary and currency distortions which have accumulated since the end of Bretton Woods fifty-two years ago. It will not be a trivial matter.

The trigger will be capital flows leaving the dollar, creating a funding crisis for the US Government. Foreigners, who have accumulated $32 trillion in deposits and other dollar-denominated financial assets will no longer need to maintain dollar balances to the same extent, perhaps even paring them back to a minimum. Furthermore, economic factors are turning sharply negative with energy prices rising ahead of the Northern Hemisphere winter, springing debt traps on western alliance governments. So how could bond yields possibly decline materially in the coming months?

Bond yields are embarking on their next rise…
The chart above of the yield on the 10-year US Treasury note exhibits the classic bull market of Dow theory. The price, which is the bond yield, is above the shorter rising moving average which in turn is above the longer-term moving average which is also rising. After an initial increase between March 2020 and October 2022, bond yields had entered a period of consolidation lasting since then, finding concrete support at 3.75% last month where it converged with the two moving averages. And with rising yields, bond prices fall as the bankers at Silicon Valley Bank discovered to their cost.

US Treasury yields are not alone. All the Eurozone bonds, UK gilts, and Japanese government bonds exhibit the same frightening condition. The two charts below of 10-year maturity UK gilts and German bunds illustrate the point.…...more here

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