The Liquidity Crisis Coming To A Market Near You

Posted by Mad Hedge Fund Trader

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saupload Mohamed-El-Erian-e1431024366379Summary

I had the great pleasure of having breakfast the other morning with my long time friend, Mohamed El-Erian, former co-CEO of the bond giant, PIMCO.

Mohamed argues that there has been a major loss of liquidity in the financial markets in recent decades that will eventually come home to haunt us all.

The result will be a structural increase in market volatility, and wild gyrations in the prices of financial assets that will become commonplace.

We have already seen a few of these in recent weeks. German ten-year bund yields jumped from 0.01% to 0.20% in a mere two weeks, a gap once thought unimaginable. The Euro has popped from $1.08 to $1.03.

Since July, we have watched in awe as the ten-year Treasury yield ratcheted up from 1.23% to 2.40%.

The worst is yet to come.

It is a problem that has been evolving for years.

…read more HERE