Wednesday, December 13, 2017

David Stockman Warns Bond Market Will Be Ground Zero for an Imminent Financial Collision

David Stockman writes:
 Uncle Sam's fiscal equation and borrowing requirements are spinning out of control exactly at the time when the Fed and other central banks are pivoting toward an epochal reversal of the last 30-years of nonstop monetary expansion.
Ground zero of this imminent collision will be the bond market, of course, and the resulting upward shock to yields across the entire maturity curve will trigger a massive "reset" of all financial asset prices. That's because, in the favorite phrase of the talking heads, the elephantine $22 trillion balance sheet of the global central banks (compared to just $2 trillion in the mid-1990s) has become fully "priced-in" to today's stock prices.

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