Mark Gilbert

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Spain's 50-Year Bond Opportunism

In the crazy world of government bonds, some nations are getting paid for the privilege of borrowing money, while others are experiencing schizophrenia as yield behavior bears no relationship to the strength of their economies. Somewhere in this mixed-up mess, investors just made a trade that sums up what happens when central banks eliminate the price-discovery function markets are supposed to serve.

Spain announced today that it has borrowed 1 billion euros ($1.3 billion) in the bond market, money that it won't have to repay for half a century and for which it is paying an interest rate of just 4 percent.…  Seguir leyendo »

Is Spain AAA?

For the first time since 2007, investors are willing to lend five-year money to Spain at a lower interest rate than they charge the U.S. government. Yes, that's not a typo.

Spain, where more than a quarter of the nation is unemployed is paying less than the world's biggest economy, which also happens to own the global reserve currency of choice and the deepest and most liquid bond market anywhere. Today, Spain's five-year bond yield dropped to as low as 1.71 percent, compared with about 1.72 percent for the comparable Treasury yield.

Provided we believe that "in price, is knowledge'' -- an increasingly bankrupt tenet in these days of central bank intervention and manipulation -- what does this tell us?…  Seguir leyendo »