US T-Bond futures closed Friday, March 27 up nearly 12% from the February close.  That was the 3rd largest monthly percent move since 1977 when my data begins and created a 3.61 standard deviation change.  This is a huge move.  What does it mean?

The US T-Bond market peaked on March 25 at an all-time high over 165, up from about 75 in 1990.  Bonds move inversely with yields, so yields have dropped to their lowest level ever.  This is not surprising because central banks have been monetizing sovereign debt, buying bonds, and supporting the bond and stock markets.  Several $Trillion in European sovereign debt currently “pays” negative interest – an extreme condition.  The Bank of Japan has aggressively purchased Japanese government bonds as well as Japanese stocks – another extreme example of a bond bubble.

Bonds are priced less on their return and risk of default and more on the current and expected purchases of central banks, which seems crazy.  However, central banks are “managing” most markets and have both the means and need to do so.  Expect more “management” in coming months.

Examine the log scale chart of the monthly US T-Bonds since 1990.

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