The German Bunds crash

Wed, 06 May 2015

German Bunds are the short of a lifetime, according to Bill Gross, the bond guru.


He seems to have called the very low on April 21 (red circle) of the 10yr Bunds as seen here in the daily yield chart. Did he? Or did he rather influence the market with his opinion?

In any case, interest rates in Germany and other European countries are ridiculously low.

  • Europe has severe problems with its Euro. This sacred cow is the reason why some southern countries will keep on making deficits and building up their debt.
  • The European central bank mimics their US counterpart with their QE and other policies of loose money. Inflation has to follow sooner or later.

The financial crisis in Europe has not been solved, nor is it only still there. No, it is growing, day by day. And European governments hope to pay back their debt by its devaluation.

Conclusion: The Euro is going to have tough times and some shiny day the bond market will wake up. The rescue of the Euro may be the fact that the US and Japan are not doing much better with their exploding debt and experimental money policies. But the bond market has no such safety net…

Bond holders have bought bonds for ultra-low interest rates and have received “paper” that is no safe bet, despite what they have hoped for. We see here an aberration in the market that desperately searches for safe investments. German and US debt seem to be the only escape in that race for safety.

What happens in such a situation? Essentially the market blinds itself!

You think these securities are safe, you buy them, the price goes up and the yield goes down. Tada, you were right, it is a safe investment, because low yields indicate low risks. You buy more and everyone else does the same. Others are doing it also? You simply must have been right…


Somewhere in the future bond holders will realize the harsh reality. Either their investment will be devalued the hard way with a hair cut, or it will be diminished softly, by inflation. And they got only tiny or even negative interest rates for taking such a risk…

On the day the bond market wakes up the real crash will start.

RSS From Zen Trade. A blog about special situations and systems.

The oil crash

One of the most remarkable trends of the last months is the deep dive of oil. Oil is tanking! One reason is the US and its ability to exploit previously unprofitable repositories. Fracking has led to an oil glut, temporarily at least. The US just became a net exporter of oil after decades of being […]

How low will the euro go?

What is Zen trading? It is trading done the simple way and that means looking for the right trend and finding the right entry spot. Here we have one, the decline of the euro. While the fundamental reason for this steep decline is the current monetary policy of the ECB called quantitative easing, psychological reasons […]

The trend scalper

This site is about true or real trends. There are two types of chart formations that look like trends. Both are trends, but only for the chartist. Beyond that they are different. One has a reason, a driving force, and the other got just created by random market forces. If a trend has emerged just […]

The Zen trader

Our standard method, the trend trading system, is all about trends. It even concentrates on the best of them. Trading like a Zen master is almost the opposite of trend riding. Essentially the Zen trader is going to bottom fish for the momentum stock. Sounds really like Zen… The fishing grounds are the small cap […]

The art of trend trading

Trend trading is easy. Wrong. It looks only to be easy in hindsight. If done right, it can be very lucrative. You can also do it wrong and then it is the opposite. One basic element for all kinds of trend trading is the stop loss. The advanced trend trader tries to enter the steepest […]

The secrets of trend trading

Is there a secret to trading or are there even many secrets? Or is there no secret at all? Naturally this is a difficult question. If the answer were known, the question wouldn’t deal with secrets. So, we have here a conundrum without a definitive answer. It is more a question with various viewpoints as […]

Zen Trade – Riding the monster wave

Zen Trade’s main operation is trading of investments. Yes, we are investotraders. For that we have a blog dedicated to finding special market situations. It is called: Zen Trade ZT stands for Zen Trade or alternatively for trading systems. Trading system? Right, for trading you need a system, and we have quite some of them. […]

How to build capital to trade

A trader may face a severe problem at the start of his career. There is capital necessary. Without capital the best trading systems, including ours, have just entertainment value. By the way, our trading systems are really entertaining. Just subscribe to our blog, and you will see what I mean. To overcome this modern hen […]

From nothing to something and beyond

The path to your first million exists and astonishingly it is only at the beginning stony. Important is to have a system that works and someone leading you to the right way. Step 1: From less than nothing to nothing There are methods that work outrageously well and a few people bring in rich harvests […]

RSS Zen Trade - Special situations and systems