The German 30-year bund traded below 0.75% for the first time in history, courtesy of Mr. Draghi. One suspects that convergence will eventually bring the US Treasury in line, especially as Ms. Yellen is easily maddened. The previously mentioned weakness in leading and concurrent indicators will probably result in yet another US QE program to drive real rates negative. It is not beyond the realm of probability, given the collective insanity that grips central banks these days, that we could see negative rates on the US 30-year. Negative rates on the 30-year bund are, of course, almost a given at this point since Mr. Draghi’s rule that he won’t buy bonds yielding less than the ECB deposit rate (-0.20% currently) ensures that bond yields will converge on that level.
Not that I’m complaining. Gary Shilling decided to get some press attention with a forecast of $10/bbl. crude. My low forecast has been $20, but I’m not going to say that he couldn’t be right, given the low level of per-capita energy consumption and we haven’t even started on the good part yet.