This Is Now The Worst Drawdown on Record for Global Fixed Income
Eugene van den Berg, March 2022
Bloomberg writes:
“Global bond markets have suffered unprecedented losses since last year.”
It was evident then already, by mid-2021 that all the central bank talk, about inflation being transitory, was merely tactics to suppress rising bond yields.
Bond markets are predictors of what to expect going forward.
In early 2021 bond yields started to rise fueled by inflation concerns. Those concerns were valid because:
- Commodity prices started rising during 2020. A new commodity supercycle started to form in April 2020;
- Commodities’ rise is fueled by demand for core commodities used in renewable energy. This demand in return is fueled by policies backing the “green new deal” and climate change hysteria:
- Demand for commodities drives the thirst for oil and gas. Commodities cannot be processed without the use of oil;
- Increased demand for oil causes the oil price to rise. Oil and gas are major input costs in all goods and services being consumed, this transportation costs rises
Inflation is also fueled by massive govt spending on Covid-19 support programs. On top of that, the world is in a huge debt position considering all debt, both government and private sector debt, that exceeds ~500% of global GDP. Global government debt alone accounts for ~226% of global GDP.
Adding fuel to fire stemming from Quantitative Easying (QE) impacting money supply.
Looking back now, who in their right minds could give thought, weighing everything together, that inflation in 2021 was transitory? The central bank elites with impressive PhDs got it wrong. Are we on our way to stagflation? The probability for that is increasing.
O, and it’s ridiculous to refer to the inflation landscape as “Putin-flation”. It is not. World events of late merely added to an already unfolding inflation story.
Eugene Van Den Berg
Eugene is an accomplished Analyst, Accountant, Controller, CFO, and Corporate Finance expert with many years of diverse finance and accounting experience across different industries and with different companies, including non-for-profits. He is a knowledge- and information worker with a passion to solve complex financial management problems and financial reporting processes. Eugene is passionate about finance and economics. He enjoys blogging about interesting economic aspects of current times. He also enjoys following how politics interjects with finance, economy and statistics. Future academic ambition includes enrolling for a PhD in Economics (for the fun of it!).