The Treasury Bond Rush Won't End Well
We don't know whether globalization will break down, or the fears will prove overblown. Either way, today's scramble for Treasuries will no longer make sense.
Will globalization survive this protectionist era? The dice are cast.
Photographer: David Paul Morris/Bloomberg
Many nations in recent years are trying to wall themselves off from the rest of the world, but financial markets are immune: Money is moving freely, showing financial markets at least remain as intertwined as ever.
In Asia, Australia, Europe and the Americas, yield curves are inverting simultaneously. Investors, fearing that the protectionist nations will be successful against globalization, are increasing the demand for the safe assets of dollars and U.S. Treasury bonds. Either the de-globalization fears are overblown, in which case Treasury yields have probably fallen too much, or they're real, in which case global financial market correlations should break down as countries go their own way.