Can Bond Markets predict a World War?

本帖于 2023-10-10 18:46:21 时间, 由普通用户 renqiulan 编辑

Nial Ferguson, a seasoned historian, always tirelessly reminds everyone of every important history lesson that's not well learned. I can still hear him screaming from his book (The War of the World): "When will they ever learn?"

 

 

 "When will they ever learn?" Let me forward this question to the bond market which, in America alone, is currently worth $53 trillion (according to Learnbond.com).


Size matters.

 

 

Government bond traders, needless to say, have feelers for war and peace, in which they have a financial stake. Readers of Mao Dun's Midnight ( 茅盾《子夜》) must recall the Shanghai bond market's crazy ups and downs in response to China's political volatility. Shanghai was---and probably still is---a playground for wheeler-dealers.

 

 

 

What about London and New York? Both markets have never run short of wheeler-dealers, of course. Interestingly, though, it's hard to find a worried bond trader in the early 1910s, as both markets contemplated no outbreak of the First World War even on the eve of August 1, 1914 (the day when Germany declared war on Russia).


It's unlikely that a few big players in the bond market could have conspired to hide bad news from the world. In all likelihood, as attested by the pre-WWI records, London's most powerful financiers, such as the Rothschilds, truly believed that the bond market just needed to iron out some wrinkles. They had no idea that the Great War was already around the corner. Because of their own over-optimistic forecast, they ended up losing almost half of their wealth. 

"Once bitten, twice shy." This idiom, however, didn't apply to European traders.

In 1938, bond values still held up fairly well in the Swiss market, thanks to the unwavering commitment of the United States to the Trans-Atlantic trade. It's business as usual even after the fact that Hitler invaded Poland on September 1, 1939, which touched off the Second World War.

Echoing public sentiment, the bond market regarded the initial 8-month lull on the Western Front as a good bet that WWII was, after all, a phoney world war. WWII was not phoney. The West had simply lulled itself into a false sense of security. That's why the Third Republic of France sank into oblivion while Hitler's troops were parading through the Arc de Triomphe on June 14, 1940.

How come the bond market in the West woke up so late when a world war was about to erupt? Also, how come the leading news outlets of those times turned out to be equally clueless?

With the benefit of hindsight, it's quite clear to us that the two world wars were each preceded by escalating conflicts between and among the great powers. Still, who or what could have turned the bond market into such a Titanic, not once but twice?

I don't profess to know the answer. But I would venture to say the following:

Given all the geological fault lines, it remains difficult, if not impossible, to predict exactly when a super-earthquake will happen --- likewise for a world war, given all the geopolitical fault lines. This being the case, we might want to have our guard up, particularly if the market smells like roses when it's not supposed to.

Be a cat, so as to smell a rat.


Author: renqiulan


(The above images come from Google.)

所有跟帖: 

Per bloomberg news, the U.S. bond market crash is spreading. -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 18:50:38

Does it make sense to you? -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 18:59:38

I read the news, and it says the collapse in bonds now ranks -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 19:02:16

among the worst market crashes in history. -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 19:02:46

Crash! That’s pretty eye-catching. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:08:29

Is it due to inflationary and high interest rate? -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 19:09:26

U.S.bonds are U.S. backed. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:06:12

BlackRock warns the worst US bond rout in history is far -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 19:11:22

from over... -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 19:12:40

We have to ask this basic question: why do we buy -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:16:15

U.S. savings bonds? -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:17:02

For steady returns? -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 19:33:54

And Americans tend to have faith in America. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/12/2023 postreply 09:35:48

The bond market broke down after FOMC meeting, per JPMorgan -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (194 bytes) () 10/10/2023 postreply 19:06:55

When America sneezes, the world catches cold. Does the world -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:12:54

catch cold? If not, why not? -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:14:02

You wanna see the world in chaos? -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 19:19:53

From history I have learned one thing. There's something -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:28:18

called "a rainbow of chaos." Chaos is part and parcel of -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:30:13

order. Let's check if we're living in this rainbow. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:31:37

Disorder and unpredictability? We are in danger then. -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 19:44:12

We are always in danger of some kind. But then, -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:49:09

danger and opportunity are yin and yang. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:49:46

危机 = 危险+ 机遇 -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 19:53:30

We Americans are born to take risks. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:58:19

Actually, we humans are born to take risks. Americans are -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 20:05:54

human enough. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 20:06:29

Bravo ! -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 20:16:20

Encore! -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:06:04

A rise in the 10 year-Treasury yield reflects a -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/12/2023 postreply 09:42:14

more optimistic view of our economy going forward. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/12/2023 postreply 09:44:11

Do we still have faith in America? Do we still have faith in -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:19:28

ourselves? Right now, we are hearing a lot of noise---the -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:21:27

noise of a roller coaster. It happened before. It's -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:23:07

happening now. It'll happen again. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:24:18

Can you please elaborate on what you mean by "the noise"? -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 19:36:05

The noise is the random, unwanted variation or fluctuation -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:46:42

that interferes with the signal. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:47:15

The signal is the meaningful information that -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:47:48

you're actually trying to detect. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:48:20

噪音,干扰人的正确判断。 -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 19:52:17

盈盈,你问得棒,太感谢了!胆敢一问,对茅盾的《子夜》,觉得甚样呢? -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:57:30

秋兰读过茅盾的《子夜》?!真是被惊到了!非常棒的的联想。茅盾笔下描写了各种复杂的社会矛盾。确实和当前时政有某些类似之处。 -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 20:03:43

茅盾的《子夜》,很有左拉《金钱》的影子。茅盾写得最好的,个人觉得是《腐蚀》,其次是《春蚕》。 -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 20:22:22

我只读过茅盾的短篇。秋兰,你读过的中文书,可能比很多中国人还多。佩服! -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 20:27:13

让我第一时间摘掉高帽子。自问爱书,爱读书,虽然读得少。 -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 21:07:01

噗~~高帽子?你也知道这个词?LOL -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/11/2023 postreply 07:06:54

小说里有不少生活常用词汇,算是学了点点滴滴。 -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:00:14

又看了一遍你的帖子。目前美国债券市场崩盘,会重演过去的历史,像以前一样成为战争的预兆吗? -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 20:09:28

盈盈,你的直觉认为会吗? -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 20:18:47

俄乌战争,和以色列现在的局势,确实让人不安。。但我仍愿意祈祷世界和平。。 -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 20:21:56

在日常生活里,个人感觉不到有普遍性的恐慌。 -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 21:04:26

同意 -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/11/2023 postreply 07:07:16

当然,“于无声处听惊雷”,不能排除个別人士先知先觉,先天下之优而忧的。 -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:03:44

A great book review with intriguing facts and deep thoughts! -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 19:39:48

Very impressive fact: a Titanic, not once but twice! -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 19:43:04

Will we get a 3rd one?! -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 19:43:37

As long as we don't rest on our laurels, we'll be OK. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 20:13:52

RMS Titanic sank because of its owner's hubris. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 20:15:58

Sounds good. -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 20:31:04

... -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:08:56

Hi, 小西! It is a fact that history and money mix. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 19:53:59

Hi, 秋兰!Yes, money is anywhere and anytime in history :) -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 20:02:50

Whenever we add value to something, we also expect -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:13:08

some profit in return. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:13:37

Shells could be money, if you will. Money is currency. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:15:38

Currency is for exchange, which is for trade. No trade, -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:17:43

no modern civilization. History is progress toward -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:18:48

modern civilization, hopefully. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:19:18

geological fault lines VS geopolitical fault lines is like -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 19:49:58

A super-earthquake VS A world war. Both make sense. -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 19:52:17

Yes, analogically speaking. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:19:57

Smart suggestions: if the market smells like roses when -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 19:55:20

it's not supposed to. Be a cat, so as to smell a rat. -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 19:56:36

谢谢秋兰分享好文好建议! -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 19:57:35

有小西你这位好读者,我惭愧自己不是个好作者。当然,因为不是个好作者,所以更要作下去。业精于勤嘛! -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 20:02:31

哈哈哈,秋兰小心发胖,因为谦虚使人发月半 :)从盈盈那儿学来的,现学现用,哈哈哈。 -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 20:05:31

Getting fat and lazy? No way. Hey, I'm a runner. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 20:07:47

I may not run fast, but I keep running. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 20:08:58

I beat the legendary hare lately. Yeah! -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 20:09:29

哈哈,中国有龟兔赛跑的故事,秋兰读过吗?原来你是那位胜利者。LOL -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 20:14:20

这方面的“国情”,不大熟悉。只知道澳门逸园赛狗,用的是电兔。较喜欢卖电池广告的那个打鼓的电兔。 -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 21:17:58

卡哇伊~~ -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/11/2023 postreply 07:09:45

Awsome, congratulations! -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 20:14:43

哈哈。晚安小西,晚安秋兰,晚安美坛 ~ ~ -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 20:17:25

盈盈辛苦了,晚安, sweet dreams ~ ~ ~ -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 20:23:30

盈盈晚安!你的勤奋,令我佩服不已。 -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 21:09:43

谢谢楼上二位。酒逢知己千杯少。不辛苦。my pleasure ~~ -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/11/2023 postreply 07:08:35

Good for you! -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 20:10:35

"Smell a rat." Pun intended. Haha! -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 20:03:24

Hahaha, pun is so much fun! -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 20:08:50

You're rhyming. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 20:10:11

You were too: a cat smells a rat! -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/10/2023 postreply 20:18:08

Haha! You can say that again. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:24:02

Olfaction helps. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:23:27

If something is too good to be true, it probably is. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:21:11

A scam is a rat wearing perfume. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 17:27:10

A bigger earthquake in financial system may lead to a war? -方外居士- 给 方外居士 发送悄悄话 (0 bytes) () 10/10/2023 postreply 20:12:51

That's my question too. -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/10/2023 postreply 20:19:42

Time will tell. Thank you, 方外居士! -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 21:21:51

小西,thanks for providing me with food for thought! Goodnight. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/10/2023 postreply 21:25:40

Good morning, 秋兰, we're learning a lot from you. Thank you! -CBA7- 给 CBA7 发送悄悄话 CBA7 的博客首页 (0 bytes) () 10/11/2023 postreply 07:18:42

小西, vice versa. -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 19:40:57

I am reading and it would take me a while :-) -Oona- 给 Oona 发送悄悄话 Oona 的博客首页 (0 bytes) () 10/11/2023 postreply 06:09:01

我昨天也是反复看了几遍。不好懂。秋兰文章,深邃,有文化底蕴。:) -盈盈一笑间- 给 盈盈一笑间 发送悄悄话 盈盈一笑间 的博客首页 (0 bytes) () 10/11/2023 postreply 07:11:33

谢谢盈盈!文化底蕴谈不上,拙文还有无限的改进空间。 -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 16:36:22

Oona, you are truly appreciated! -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 16:31:02

I agree with you. I invest significant percentage on gold.. -唐宋韵- 给 唐宋韵 发送悄悄话 唐宋韵 的博客首页 (0 bytes) () 10/11/2023 postreply 09:22:48

Seize the day. Seize the golden opportunity. Hi, 唐宋韵! -renqiulan- 给 renqiulan 发送悄悄话 renqiulan 的博客首页 (0 bytes) () 10/11/2023 postreply 16:39:35

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