02/18/2020 - Martin Armstrong on the Crisis unfolding in the Repo Market
“If there was a free market, then you would have witnessed the bonds crash in price and interest rates rise as people perceived risk. The introduction of negative interest rates which began in late 2014 going into 2015.75 and Quantitative Easing, shifted the risk from the free market to the central banks. This is what I mean that they are now TRAPPED! If interest rates rise, their portfolios crash in value (price).
Now we have a serious crisis that has shifted from the free trading bond markets exclusively to the central banks. This is now part of the crisis unfolding in the REPO Market. There does not appear to be any recovery on the horizon. Politicians are undermining the confidence in government, to begin with, and that will influence bond buyers.”
