06-20-2018, 02:31 AM
No, the Europeans aren't buying all that many Treasuries anymore, and the consequences could be significant:
Yet beneath the surface of the world economy, vast capital flows through fixed income markets have commanded far less scrutiny – despite far-reaching implications. A large liquidity squeeze looms, with equally large potential consequences. Cross-border bond purchases by fixed income investors could plausibly drop by more than half this year and next, to an average of only $500bn a year, versus the 2017 tally of $1.2tn. A shift of this scale, if realised, will exacerbate existing upward pressures on global bond yields to an extent greater than markets presently anticipate, with the US bond market – and the dollar – particularly vulnerable.
European recovery is bad news for the world's bond prices | FT Alphaville