Thus, the recent problems faced by Greece are only the tip of a sovereign debt iceberg in many advanced economies (and a smaller number of emerging markets). Bond market vigilantes already have taken aim at Greece, Spain, Portugal, the United Kingdom, Ireland, and Iceland, pushing government bond yields higher.

The US sovereign debt market shows no similar evidence of having reached a limit yet. But bond markets do not issue many early warning signals witness the sudden run up of yields in Italy and Spain a year ago.

Noting the increasing voluntary use of collective action clauses in sovereign bond contracts by both developing and developed countries,

It is true that extraordinarily low long term bond yields put us outside the range of historical experience. But so would a scenario in which a sudden bond market crash drags down prices of stocks and housing.

Global stock markets have, overall, reached new highs. And credit markets show low spreads, while long term bond yields have fallen in most advanced economies.

Since 2011, the ECB s analysis of weak eurozone growth has stressed the negative impact of an impaired and fragmented financial system, with high sovereign bond yields and funding costs for banks resulting in prohibitive lending terms in the peripheral countries. Major progress in fixing these problems has already been achieved.

13. Currently, the 30 year United States inflation indexed Government Bond yields a quot real quot return to maturity of approximately 3.6 per cent per annum.

With fears mounting that one or another euro zone country may default, yield spreads on government bonds between EMU countries have reached record highs. For some time now, Greek ten year government bond yields have been about 300 basis points above German yields.

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During the two year period, bond yields fell in most major markets and the Fund apos s total bond portfolio had a return of 3.6 per cent for the year ended 31 March 1997 and 7 per cent for the year ended 31 March 1998.

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Bond. James Bond.

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After the government announced its plan, the euro fell to its lowest level in nearly two weeks on Friday, while the Italian bond yields hit their highest level in three weeks.

In short, though central banks creation of macro liquidity may keep bond yields low and reduce volatility, it has also led to crowded trades (herding on market trends, exacerbated by HFTs) and more investment in illiquid bond funds, while tighter regulation means that market makers are missing in action.

But if they maintain large budget deficits and continue to monetize them, at some point after the current deflationary forces become more subdued bond markets will revolt. At this point, inflationary expectations will increase, long term government bond yields will rise, and the recovery will be crowded out.

As holders of euro denominated assets recognized this situation, they turned to the ECB for insurance (which the ECB could not deliver under its previous president, Jean Claude Trichet, whose leadership was defined by his commitment to maintaining price stability). Investors subsequent efforts to price in the risk of a eurozone breakup not the volume of sovereign debt caused bond yields to spike.

The euro was in serious trouble, buffeted by rumors of imminent banking collapses. Bond yields in southern Europe were rising, and a pervasive sense of apprehension and fear cloaked governments in European capitals.

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James Bond. Oh, yes, Mr Bond.

Likewise, in October 2014, US Treasury yields plummeted by almost 40 basis points in minutes, which statisticians argue should occur only once in three billion years. The latest episode came just last month, when, in the space of a few days, ten year German bond yields went from five basis points to almost 80.

Under the OMT program, the ECB can replace foreign outflows from sovereign bond markets through direct purchases, putting Spain on par with non eurozone countries like the United Kingdom. And, to the extent that there is even an informal price target associated with the ECB s commitment to purchase bonds, foreign outflows, at least from the sovereign bond market, are automatically replaced, in full, with ECB cash.

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MAN ON MEGAPHONE Ahoy, Mr. Bond. Ahoy, Mr. Bond.

The bond channel doesn t work when bond yields are already low and the credit channel doesn t work when banks hoard liquidity and velocity collapses. Indeed, those who can borrow (high grade firms and prime households) don t want or need to, while those who need to highly leveraged firms and non prime households can t, owing to the credit crunch.

ISTANBUL When European Central Bank President Mario Draghi announced in late July that the ECB would do whatever it takes to prevent so called re denomination risk (the threat that some countries might be forced to give up the euro and reintroduce their own currencies), Spanish and Italian sovereign bond yields fell immediately. Then, in early September, the ECB s Council of Governors endorsed Draghi s vow, further calming markets.

Bond offering

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Bond Paper

Bond 5,000.

Mr. Bond.