Federal Reserve is unlikely to be decided on a rate hike in June, analysts say Goldman Sachs, which in May had forecast that the rate will be increased in June, with a probability of 35%. Now they come out with a new outlook: at the June meeting, the interest rate will remain at a level of 0.25-0.5%, but will be raised either in July (35% probability), or in September (35% probability)
<. p> Similar data were obtained in a survey conducted by The Wall Street Journal. Only 6% of economists surveyed by the WSJ, consider possible rate hike at the meeting of the Fed’s June 14-15, while 52.38% believe that the rate will be raised in July. Almost a third (30%) of respondents believe that this Fed will not stop, and in September, will another interest rate increase.
Raising rates could lead to an even greater capital flight from emerging economies and the transfer of assets into less risky instruments such as government bonds of advanced economies
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The market of these securities has already appeared in a unique situation. With something like the stock exchange history has not yet been encountered. The yield on them has fallen to historic lows.
Never before investors are not allowed to borrow trillions of dollars, receiving so little benefit in return, the newspaper writes Bloomberg.
The average yield on US bonds, Japan, Germany and the UK with a maturity of 10 years and a total volume of $ 25 trillion has fallen to 0.69%, according to BNY Mellon.
not even scare investors bonds with negative rates of whose aggregate value of the beginning of June reached a record $ 10.4 trillion, according to the international rating agency Fitch. Investors are so afraid of global economic slowdown, that the neglect risks associated with the possible emergence of a bubble around the sovereign debt
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investors fear regarding the destabilization of the world economy fueled by the upcoming referendum on the exit from the European Union in the UK. VIX fear index on the Chicago Stock Exchange reached a three-month high, breaking the mark of 20 points.
June 13 for the first time in history went into minus the yield on 10-year government bonds in Germany. Earlier, Switzerland has announced plans to release a 13-year zero-coupon bonds. Almost 64% of the global value of government bonds with a negative yield falls on Japan debt obligations ($ 5.3 trillion), with a maturity of 15 years. This is due to the fact that Japan’s central bank has maintained the interest rate in the country at around 0.1%, and for new deposits in January in Japan operates a negative rate of -0,1%.
On this background, debt obligations of the US Treasury Treasuries seem the most advantageous to the yield in the positive zone and is higher than that of European peers.
But on Treasuries yield recently declined to a record 1.62 % – the lowest figure since 2012
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the flight of capital in government bonds is confirmed by the fact that the premium for urgency (compensation that is given for the paper with a longer repayment term than short-term bonds) fell below zero and is -0.47 pp for 10-year Treasuries. Over the past 50 years, the negative premium is fixed for the first time. This suggests that investors do not see in the future, any factors that play in favor of the increase in bond yields.
«Award for urgency is almost never be negative, but we are in new reality “, – grins Stanley San, a strategist at new York-based unit Nomura Holdings
The yield on government bonds of advanced economies shows the lowest rate in the past 145 years, since 1871, said Jack Mulvey. , a leading investment strategist at BNY Mellon Asset Management, one of the 10 world’s largest management companies. According to another economist, Bill Gross of fund Janus Global, the current situation has arisen for the first time at all in the last 500 years.
If the yield again go into growth, investors will face a multi-billion dollar losses. Even a relatively small increase in yield will result in serious losses for traders, says Financial Times. The fact that the 10-year bonds of countries such as USA, UK, Germany and Japan, have lowered their yields to lows, “it is absolutely clear make markets more vulnerable”, says Torsten Slok, senior international economist at Deutsche Bank.
According to estimates Goldman Sachs, if the yield of US Treasuries will rise by 1 percentage point, this would entail a loss of $ 1 trillion, which exceeds even the financial losses from the mortgage bond crisis of 2008.
«This supernova, which one day will explode” – said Gross of Janus Global
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