Government bonds around the world are seeing lower yields, so is money getting scared about the global outlook?

There's many parts to the trade of finding returns on money. When economies are doing well we see shifts out of bonds to riskier assets like stocks. When economies do worse then the safety of bonds picks up. Things get messier when you have to factor in extraordinary monetary policy around the globe. From a wide look it seems that most major economies are circling around a negative rate cycle.

The world is full of broken promises and broken expectations. The US should have been sailing at growth of 3%+. Brexit shouldn't have happened. Inflation and the economy should have picked up in Japan and Europe. At some point investors lose faith in a country's or central banks ability to fix things and when that happens on a global scale, the tides of cash flows start moving.

We're seeing a lot of action in commodity and EM economies. Take a look at bond yields today in the Asia/Pacific region and they're all down. The pattern is fairly similar across all the worlds bond markets. Take a look at Spain whose 10yr yield has dropped to 0.95%. That's Spain with 20% unemployment and deflation. Yes it's one of the only major countries showing some form of growth but would you invest in it if it wasn't backed up by the ECB?

There is no reason why the aussie should be so strong in the face of an easing central bank. The same goes for the kiwi and its upcoming rate cut. This has been happening while USD was strengthening so you can't blame the USD side completely. It suggests that money is back looking for safety and locking into returns in a world that's not done with cutting interest rates.

These moves can be very large for fx and other markets, can last a long time and involve huge sums of money. They are not to be messed with. I used the term tides further back and these shifts can act like the sea. There's not usually one big move and it's all over, it comes in waves where we'll see markets move then steady, then a few sessions or days later we see it happen again.

I don't know whether we're at the start, middle or near the end but the signs are pointing to the fact that it's happening. For trading that's going to mean the potential for even more moves that are out of sync with the fundamentals and that is going to create more head scratching when they happen.

Through summer liquidity into the mix and things get even tougher.

Get you wellies on