Marketplace Unnerved As Bond Yields "Race To The Bottom"
(Kitco News) - Gold prices are sharply higher, hit another six-year high above the key $1,500.00 level, and continue to climb in late-morning action Wednesday. Silver prices are also solidly higher and have hit a 13-month high of $17.12, basis December Comex futures. Safe-haven demand is very keen in the marketplace at mid-week.
The yield on the benchmark U.S. Treasury note dropped to 1.61% this morning, with government bonds in Europe also seeing their yields slide sharply, especially the safe-haven German bond (bund). Some veteran market watchers are saying this morning's big down-moves in bond yields are similar to the bond price action seen during the 2008 financial crisis.
The U.S. stock market is selling off sharply, crude oil prices are tumbling, and the U.S. dollar index is also weaker on this very active trading day.
The U.S.-China trade war is being blamed for the market turbulence recently. It appears the ramifications of the trade war, combined with the already anemic growth in many of the world's major economies, has sparked a "race to the bottom" for world government bond yields. Bond traders are reckoning central banks will continue to ease their monetary policies by lower interest rates even further, including those central banks that already have pushed interest rates into negative territory. New Zealand's central bank cut its interest rate more than expected Wednesday, by 0.5%. Bets are now that the Federal Reserve will soon lower its interest rate again.
What all of the above suggests, overall, is not clear at this time. But one thing is clear: gold and silver market bulls are enjoying the very anxious global marketplace.