Martin Armstrong writes and I concur that ‘Bond yields” are the canary in coalmine. He writes in his blog in response to a question by a reader about “what to watch out for”
“The first was the inverted yield curve which led many to think we were heading into a recession last summer. Then the Repo Crisis hit and despite being touted as just a fluke due to taxes, after more than three months the Fed cannot get out of providing liquidity without stepping back and allowing the free markets to raise short-term rates.
The liquidity crisis has spread even to Japan. Here the Bank of Japan has stood up and announced it would but government bonds without any limitation trying to also prevent interest rates from rising.
The ECB will have to deal with the whole negative interest rate crisis they have created. They will be forced to allow rates to rise or all member states will have to agree to allow the ECB to adopt the same policies as in Japan — buy all government debt without limit.
Keep an eye on Europe. I do not see any way of avoiding this crisis. Politicians are too busy with other things. The free market will push rates higher and the central banks will be unable to prevent the rise in rates ahead.”