Staan we aan de voor­avond van een CRASH van De OBLI­GA­TIE MARKT?

Times of Suriname - - TIMES UNLINED -

Geachte le­zers van Ti­mes of Su­ri­na­me, we ho­pen dat jul­lie heb­ben ‘ge­no­ten’ van ons ar­ti­kel van de vo­ri­ge week.


Sin­ce the elec­ti­on for Mr. Do­nald Trump as the 45th pre­si­dent of the U.S.A., in­te­rest ra­tes are ri­sing in the USA and the rest of the world.

As can be seen from be­low chart, the yield of the USA 10-year no­te has in­crea­sed from No­vem­ber 8 up to Fri­day No­vem­ber 18, from 1.862% to 2.335% an in­crea­se of ap­prox. 25.4% in just 10 days. Ba­sed on the in­ver­se re­la­ti­ons­hip bet­ween bond’s pri­ce and its yield, we can con­clu­de that sin­ce Mr. Trump has been elec­ted as USA 45th pre­si­dent the bond mar­ket sold-off mas­si­ve­ly.


Ba­sed on the fact that U.S. Tre­a­su­ry bills, bonds, and no­tes di­rect­ly af­fect the in­te­rest ra­tes on fixed-ra­te mort­ga­ges, mort­ga­ge ra­tes in the USA for the aver­a­ge 30-year fixed-ra­te mort­ga­ge hit 4.125% on Fri­day, No­vem­ber 18, the hig­hest sin­ce Ju­ly 2015.

That is mo­re than half a per­cen­ta­ge point hig­her than on elec­ti­on day as can be seen from be­low chart.


The main rea­son for the jump in the yield of the 10-year no­te and sub­se­quent­ly the 30-year mort­ga­ge ra­te, is the big pro­mi­se of USA pre­si­dent elec­ted Mr. Do­nald Trump, pled­ge to work with law­ma­kers to in­tro­du­ce le­gis­la­ti­on to “spur $1 tril­li­on in in­fra­struc­tu­re in­vest­ment”, which is high­ly in­fla­ti­o­na­ry.

Mr. Trump plans al­so to re­du­ce taxes in or­der to in­crea­se eco­no­mic growth by govern­ment spen­ding, re­mind most of us of a si­mi­lar plan by pre­si­dent Ronald Re­a­gan, in the eigh­ties, which la­ter on was cal­l­ed Re­a­ga­no­mics.

Be­low 100-year in­fla­ti­on chart of the USA, shows how Re­a­ga­no­mics has trig­ge­red, in 1980, the hig­hest in­fla­ti­on ra­te in pea­ce ti­me in the USA. As a con­se­quen­ce of this, the Fe­deral Re­ser­ve board led by Mr. Paul Vol­c­ker rai­sed the fe­deral funds ra­te, which had aver­aged 11.2% in 1979, to a peak of 20% in Ju­ne 1981 as can be seen from be­low chart. Ba­sed on this, the pri­ce of Gold, - the ul­ti­ma­te hed­ge against in­fla­ti­on - ro­se to US$ 850.00 an oun­ce in Ja­nu­a­ry of 1980, which cor­rec­ted for in­fla­ti­on is equi­va­lent to as can be seen from be­low chart. The abo­ve chart shows al­so that the hy­per­in­fla­ti­on cy­cle of the 1980’s has trig­ge­red a mas­si­ve re­ces­si­on in the ear­ly 80’s.

His­to­ry nor­mal­ly re­pe­ats itself, if this is the ca­se, we can ex­pect Trum­po­no­mics to ha­ve a si­mi­lar ef­fect as the Re­a­go­nim­cs had in the 80’s, on the in­te­rest ra­tes, and sub­se­quent­ly on the pri­ce of gold, glo­bal ca­pi­tal mar­kets and sta­te of the world eco­no­my.

Hig­her in­te­rest ra­tes in the 80’s lead al­so to a hig­her US-Dol­lar as can be seen from be­low chart. His­to­ry shows us al­so that hig­her in­te­rest ha­ve lead to; hou­sing mar­ket, bond mar­ket and stock cras­hes, and that the com­bi­na­ti­on of hig­her ra­tes and US-Dol­lar had lead to bankrupt­cy of tho­se de­vel­o­ping coun­tries, which has bor­ro­wed in US-Dol­lar in bo­nan­za ti­mes to fi­nan­ce am­bi­tious govern­ment plans.

For the sa­ke of hu­ma­ni­ty let’s ho­pe and pray that his­to­ry will not re­peat itself this ti­me and that Trum­po­no­mics will not be­co­me Re­a­ga­no­mics on steroids.


Als uw be­trouw­ba­re fi­nan­ci­eel ad­vi­seur zijn wij van PGM CA­PI­TAL graag tot uw dienst om u bij te staan om uw ver­mo­gen te be­scher­men in de­ze moei­lij­ke, tur­bu­len­te en on­ze­ke­re tij­den.

Het is een ge­noe­gen om u te heb­ben ge­ïn­for­meerd en tot de vol­gen­de week.

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