Watch the Bond Market

Currency and bond markets often foretell what will happen in the equity markets and greater economy. For example, yield curves more often than not predict economic recessions.

Now we’re looking at a bond market that is skittish of sovereign issuers. We have a failed UST auction. And we also have widening corporate bond spreads and negative returns on high yield issues.

Also, subscriptions for new bond issues appear to be drying up. According to a recent Bloomberg article:

Borrowers in the U.S. and Europe sold $5.96 billion of high-grade securities this week, the least this year and about 90 percent less than the average $52.9 billion…

Beware…bond markets don’t look well.

Source: Bloomberg