Super Mario had already shown up to one
press conference this week so perhaps it
was too much to expect a second the
Nintendo original stole the show at
Apple's new product launch so instead it
was plain old mario draghi who turned up
to brief markets on the European Central
Bank's latest monetary policy thinking
there was no sign of the Super Mario who
has turbocharged bond markets with ever
more exotic varieties of quantitive
easing and negative interest rates it's
not just European investors who hang on
every word in mr. Draghi's press
conferences plenty around the world came
away disappointed when the ECB president
punted on whether QE will be extended
beyond next March or widened to include
a broader range of potential bond
purchases us fixed income markets are
now acutely sensitive to pronouncements
and rumors from the ECB and from the
Bank of Japan to investors are playing
in an ever shallower pool of bonds that
offer decent yields and so they're
looking all around the world for income
after mr. Draghi's non announcement at
the end of the European trading day the
yield on the 10-year Treasury was up by
the same amount five basis points as the
yield on the German bund meanwhile as
japan's government bond yields have
risen over the past couple of months to
the point that the 10-year is only three
basis points negative now japanese
investors have sold us treasuries and
turned to long dated local issues the
government sold a new 30 year bond this
week to surprisingly strong local demand
so the threat of waning international
demand has kept us yields up even as the
odds of a sep tember rate increase by
the Federal Reserve have lengthened US
Treasury Bulls who are betting on yields
going back to our face a couple of
hurdles will the Bank of Japan at its
meeting later this month exhibit cold
feet on negative interest rates for
example and has mr. Draghi really only
delayed the announcement of more
bond-buying as the market currently
thinks or might the ECB switch policy
perhaps to adding equities anything but
further raises yields in Europe or Japan
threatens to do the same in the u.s.
it's not just iPhone users who will be
happy to see Super Mario back
their screens