🔴Has fiscal stimulus burst the bond bubble?

by | May 7, 2024 | Bank Failures | 46 comments

🔴Has fiscal stimulus burst the bond bubble?




Markets, bitcoin, and the dollar had a Reversal Tuesday fueled by Trump’s promise of massive artificial fiscal stimulus. Trump trying to buy a second term, but with democrats holding stimulus hostage, stimulus will come with socialist labor laws and Keynesian helicopter money. Betting markets see now see Trump as the underdog.

Mandated paid sick leave will hurt employees.

Bailouts for oil, airlines, hotels, and cruise ships are just another backdoor bailout for the banks.

While all the safe-haven assets dropped today, bitcoin’s price rose along with the other risk assets. Bitcoin now trades highly correlated with the stock market.

Joe Biden’s gender-based VP list is sexist. Bernie Sanders says America’s tax system should be more like Sweden, then admits he knows very little about it.

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The bond market has been on a rollercoaster ride in recent weeks, with yields on US Treasuries spiking to their highest levels in over a year. The sudden increase in bond yields has left many investors wondering if the bond bubble is finally starting to burst.

One of the main catalysts for the recent spike in bond yields has been the prospect of a large fiscal stimulus package being passed by the US government. The $1.9 trillion relief package proposed by President Joe Biden has raised concerns about inflation and the potential for an overheating economy, leading investors to demand higher yields on government bonds.

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Fiscal stimulus measures are typically inflationary, as they inject a large amount of money into the economy, which can lead to an increase in consumer spending and drive up prices. As a result, investors are starting to price in the possibility of higher inflation in the future, leading to a sell-off in the bond market.

The surge in bond yields has not been limited to US Treasuries, with government bond yields rising across the board. In Europe, bond yields have also been on the rise, as investors worry about the potential impact of additional stimulus measures from central banks.

The question now is whether the recent spike in bond yields is just a temporary blip or the beginning of a larger trend. Some analysts believe that the bond market has been in a bubble for some time now, with yields pushed to historic lows by the ultra-low interest rate environment and massive bond-buying programs by central banks.

If the recent rise in bond yields is indeed the bursting of the bond bubble, it could have significant implications for investors. Bond prices move inversely to yields, so a rise in bond yields means a decline in bond prices. This could lead to losses for investors who hold a significant amount of bonds in their portfolios.

On the other hand, higher bond yields could also be seen as a positive sign for the economy, as they reflect growing optimism about a quicker recovery from the pandemic. Rising bond yields could also be a boon for banks and other financial institutions, as higher yields translate into higher interest rates on loans and other investments.

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In conclusion, the recent spike in bond yields has raised concerns about the potential bursting of the bond bubble. Investors will be closely watching the bond market in the coming weeks to see if the trend continues or if yields start to stabilize. Only time will tell if fiscal stimulus measures have indeed pricked the bond bubble or if this is just a temporary blip in the market.

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46 Comments

  1. @Angel-O369

    Intermittent fasting going mainstream.

  2. @karldilkington8587

    Thank you for saying what you did about Sweden. So many misconceptions about the Swedish economy.

  3. @laserloui2008

    Politics is a popularity contest. So picking a women would fit the bill and therefor she (any women that is) is more qualified than a men to do the job (of being popular).

  4. @laserloui2008

    Picking a man over a women is sexist no matter what.
    Picking a women over a man is equality!
    Feminism 3.0!

  5. @sighwestberry5079

    starting in the 32 minute…..Got a good laugh listening to his over heated rhetorical argument titled 11 out of 12 sexism. Not peter shift…its peter blindspot

  6. @tomaschazarreta1263

    Bruh I started dying when you said Pet Butiggieg was kind of in between, that was the funniest thing I heard all week

  7. @kenpat8186

    Peter is on the ball here. For the last 3 days, Bonds yields have been going higher even as Stocks are cratering.

  8. @Nikolleshi

    "There is only one guy in the top 12 and if you think about it he is a homosexual man so he is kind of in between so he is not a man really there is not straight man only 11 women"hahahaha

  9. @narcissisticcarnist5532

    Gold standard, high interest rate and strong dollar does not boost saving and investments , it shrinks the pool , create irreversible debt and punish all economic activities.

    What increase savings and investment is quantitative ease , low interest rate and weak dollar , while productivity and affordability are free to be counted into national reserve to generate new wealth , savings are boosted by asset appreciation , with necessities price unchanged due to quantity boom , purchasing power is increased through market elasticity in an inflation mechanism , and weak dollar appreciate foreign asset and depreciate national debt , and decrease trade deficit to let money stay in America, eventually turns into American savings

    The federal reserve is the saviour of the planet

  10. @pekkarousu3616

    Taxation Sweden in short
    * 0% death tax
    * 0% gift tax
    * 30% capital gains tax but you can also chose 0.4% tax on the capital each year (much lower tax)
    * profit tax companies 19%
    * total taxation low income earners 65%, middle 70% and high 72%
    * 0% housing tax (only a small fee)
    * 30% dividend tax
    * taxation on GDP 44%. If the US government, states and municipalities did not borrow money taxation to GDP should be 40% with the same spending. In Sweden we waste money on immigrants and foreig aid and other international costs. Our military cost 1.5% of taxes but in the US about 30% of all taxes. Cut your idiotic military spending!

    Taxation in Sweden is NOT socialistic, taxation in the US IS socialistic.

    We used to have an extra 5% tax on income over a certain income. No this is gone so highest marginal taxation is 51%. About 35% of those with highest income pay 51% marginal taxation. The SOCIALIST PARTY just decided to abolish that extra taxation.

    Bernie knows NOTHING.

  11. @A_Box

    So the question is how fast this will go?

  12. @marketrhythms4273

    Stimulus is good, period. You don't want people in the gig economy to have to go outside because they have to and further worsening the cause. They need to send checks to poor people and facilitate healthcare. There is a tight labor market. Free money is not free if you can recoup productivity. They should not bail out oil industry.

    When stocks goes down and iff Bitcoin goes up, you want to be buying it. I think we need to see speculators capitulate before even talking about if Bitcoin can be proxy for gold.

  13. @FOO261

    I’m stackin’ toilet paper and wiping myself with 1 oz. silver bars

  14. @mva8082

    Who the hell would watch Jim crackehead Cramer when I can watch Peter Schiff speak the truth

  15. @reyessecurity

    Why are gas prices not dropping? Crude oil is down?

  16. @pekkarousu3616

    Total taxation in Sweden is 44%. In the US 24%. But the US has normally a 25% deficit in taxes for government, states and counties (public spending deficit). If the US should have budget discipline and not borrow taxes to GDP should be 40%. The only reason the US public sector has so low tax to GDP is because it can borrow so much.

  17. @12InchesUnBuffed

    Peter, big down day today and another down tomorrow because of trump's speech.

    Waiting for your podcast today 🙂

  18. @pekkarousu3616

    One wrong thing. Highest marginal tax used to be 56%. There was a extra 5% tax on income över a certain level. Now this 5% is gone and it was our SOCIALIST PARTY who is in charge now who took it away!!! So now the top marginal tax is 51%.

  19. @pekkarousu3616

    Total taxation in Sweden is high. If you're low income total taxation is about 65%. Middle income 70% and high income 72%. In effect flat tax but it depends individuellt what you consume. VAT för food etc ia hard on low income earners and tax on gasoline and electricity is sky high in Sweden which is expensive for low income earners.and as you said no death tax, gift tax or property tax and no wealth tax. Bernie should hate all this completely. Bernie is a clueless idiot who knows NOTHING about Sweden.

  20. @pekkarousu3616

    Capital gains tax in Sweden is 30% but if you want you can invest in stocks, bonds, funds and pay only 1.25% of the value. Much less tax that way normally. I don't think Bernie likes that.

  21. @kiii3

    Hi Peter, my name is Sean I'm a FA in Hawaii. I've been listening to your podcast for the past 5 years.
    My question today is: with the market going into bear market territory, you consistently recommend to buy gold, but historically gold under-perform along stock market. Historically gold has never been a good hedge in a falling market. So, why should I buy gold now if it sells off together with the general stock market?

  22. @zelda5215

    Your continued bashing of those who are not wealthy has finished you for me. Not everyone is wealthy, not that you would know, because you would never ever meet anyone who is on under 20million a year.

  23. @crucibull

    Best intro in the game

  24. @tomsmyth421

    It’s Okay to Be White.

  25. @rogerbudney9294

    We are living in the " Federal Reserve Matrix "

  26. @mistyosborne8389

    Peter Schiff tells the truth with common sense. I love ur podcast

  27. @leinad5243

    Free money and stuff is great and good….corporations got bailed out all along now its our turn….Party time people….socialism for the rich and now finally socialism for the rest…..Trumpy I knew youd do the right thing!

  28. @milovacc1195

    would like to see some charts, figures, widgets, maybe a blackboard……… with some dramatic scribbling, breaking chalk………even foot stomping !!

  29. @mireillelebeau2513

    New laws to protect workers against corporate greed, Peter: Workers will fake illness to have a sick leave

  30. @aaronmitchelllivell

    Leave it to CNBC …."Consumers sitting at home and not out spending money because they fear catching the coronavirus is the ultimate negative outcome," he added. "It has been the U.S. consumer who has been driving the recovery bus during this long expansion."
    …How idiotic when consumers are out spending way more in fear of the virus.

  31. @geraldmillington9509

    I've no idea what your issue is with socialism. I grew up in Australia, which is now screwed because they're getting rid of socialism and regulation, and the same reason the US completely screwed. Australia didn't even notice the 2008 crash because of heavy banking regulation from way back in the Hawke administration. (Hawke was a serious socialist, and one of our best)

    I now live in Sweden, and guess what, everyone has an incredible standard of living, and I love it here. All in all though, I still hold gold in my portfolio at a higher percentage than most people.

  32. @ippothedestroyer

    If only i followed my gut and peters advice and put more on my money in gold.Only 15-20% in gold only thing thats stable right now.

  33. @The_Dougie

    What's wrong with EPGFX, Peter?

  34. @Oytz

    Peter should stay away from talking about paid sick leave. First of all. If hes not aware, dems are just as much in the pockets of big business as the Republicans, so the odds of a stimulus counter offer of permanent paid sick leave from the house is about -1000%. They wont do it.
    Second of all, peter sounds like a lunatic when he talks about the possibility of rampant fake sickness fraud. There are other countries that have paid sick leave. Actually…most other countries do

  35. @AGNIVEER6152

    Hey peter…official Bear Market. Lets party 🙂

  36. @bill74ish

    Seems to be saying money in blue collar pockets is bad? Tax relief will do a lot of good.

  37. @kylemartinnelsonify

    27:3o "…last and certainly LEAST."
    Brilliant! Thanks as always Peter – you deserve all the credit that should be coming your way. Beginning of the end here…

  38. @dramtoet1809

    We have had paid sick leave for ages in my country and the amount of people that miss use it on a daily basis is small. It might even save money because you do not infect other people. Thel problem is disability and long term sickness. A college was in a car accident and has not been to work for over 1,5 years, paid leave. I do not know if he is not able to work but there is little incentive to go to work since he has his pay either way.

  39. @catissurfing8079

    What do you think of the mining shares going down as well? With the demand of gold and silver we should see rise, is it just a temporary dip?

  40. @capt.sparrow34

    What is happening to gold miners ETFs?!!!

  41. @monkeyloven

    Peter when is gold gonna go up and with the gold miners???

  42. @Ty-lz3iz

    Federal reserve printing more money interest rates going to zero get gold and silver down??
    Can somebody please explain this to me how the Fed is ramping up QE, lowering interest rates money printing money printing money printing and more coming yet gold and silver or down today?

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