Bond rally that was paused ahead of FOMC came back with renewed pace thanks to dovish FED, dovish comments from Janet Yellen and ultra loose policies from European Central Bank.
- Dovish comments from FED signals that exit from policy will not be smooth and fast. So the rallies are here to stay along with cheap money.
- Ireland for first time in history issued bonds at negative yield. Irish national treasury management agency borrowed € 500 million for six months at a negative yield of -0.01%. Previous auctions for similar bills in January was sold at zero yield and at 0.02% in 2014.
- Trillion dollars of central banks' balance sheet may cause havoc in the future but it is pointless to argue now but instead time to enjoy the rallies.
- Bonds might still provide some capital appreciation, real beneficiaries of these ultra-loose policies will be equity markets especially across Euro zone.
- In another instance German 10 year yield fell to record low of 0.17% in intraday trading. Germany this week auctioned 10 year yield at record low of 0.25%.
Dollar will remain well bid against Euro, as yield differential increases, even after dovish comments from FOMC made treasuries rally and yields to fall. Stock indices across Europe are yet to recover from recent profit booking but is expected to start rallying soon.


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