Enjoy the rally and blow off top in stocks, because as we keep warning, the Everything Bubble could very well blow up sometime in 2026.
As I outlined in my best-selling book The Everything Bubble: The Endgame For Central Bank Policythe bond bubble is THE definitive bubble of our lifetimes. Every other bubble whether it be the Tech Bubble, Housing Bubble, etc. has been a derivative of the almighty bond bubble that was generated during the super cycle bull market in bonds that went from 1982 to 2020.
I’m talking about the chart below: a nearly 40-year period in which bond yields fell almost continuously. In simple terms, this chart shows that debt servicing/ interest payments became ever cheaper. Everyone from countries, states, cities and even corporations took advantage of this to issue debt creating the single largest bubble in human history: the current debt bubble of over $300 TRILLION.
You’ll note that all of this ended in 2021 when yields broke out of their multi-decade downtrend. This was a pivotal moment in the financial system. The only reason it didn’t result in a crisis was because A) banks were not required to mark their debt assets at market value and B) the entire financial system bet on the Fed and other central banks coming to the rescue.
As a result of this, bond yields have effectively traded sideways since the breakout in 2021. This is the ONLY thing stopping a crisis from appearing in the debt markets: relative stability in the bond markets is stopping bond yields from ripping higher.
Thus, the multi-trillion dollar question today is whether this bond yield rally was simply a blip in the grand scheme of things and bond yields will soon break down to new lows… OR if the super cycle bull market in bonds is definitively over and a long-term bear market in bonds is about to begin.
If it’s the former, then we can expect things to continue on as they have for most of the last 40 years, albeit with the occasional crisis. But if it’s the latter, and bonds are in fact about to begin a long-term bear market… the Everything Bubble will explode.
Mind you, this is a GLOBAL phenomenon; it’s not just confined to the U.S. Bond yields have broken out in Japan, Germany and other nations as well.
This is the single most important issue for investors to consider. And by the look of things, we’ll know the deal within a few months. Japan is the nation most in danger of losing control of its bond market, but Europe and the U.S. are not terribly far behind.
If you’re looking for guidance on how to invest for this, we are putting together a Special Investment Report on how to navigate the end of the Everything Bubble. You can join our daily market commentary Gains Pains & Capital to make sure your account is ready to go when this report is released to our clients.
To do so…
Graham Summers, MBA
Chief Market Strategist
Phoenix Capital Research
