I have readers on this blog from all over the world, but the majority are Americans.  Unfortunately, most Americans, even those interested in the financial markets, tend not to hear a lot of news about overseas.

Sure, if you tune into CNBC, you will hear that Greece is on the edge of default again.  But then they will quickly shift gears and devote most of the discussion to American companies and their new products and their profitability.

So if you don’t search for some of your financial news, you may not be aware that foreign markets were rattled on Tuesday.  The Asian and European stock markets were mostly down.  The Shanghai index in China was the most significant story in stocks, as it lost over 4% in one day.

I am not saying this is the beginning of a major downturn in China, but it may be a signal that the beginning is not far off.  I don’t like to make big predictions in financial markets, but I am as convinced as I can be that China is in a major bubble.  The Chinese have themselves a real estate bubble and a stock bubble at the same time.  It isn’t going to end well.  I believe the only question at this point is “When?”.

Perhaps the even more significant news came in the bond market.  The U.S. 10-year yield closed just shy of 2.20%.  This is significant because it was under 2% for a while.

But the European bond market is the biggest story.  The German 10-year yield jumped by 32% in one day.  It closed at 0.52%, which is still incredibly low, but not as low as it was just a few weeks ago at 0.10% and lower.  It was close to zero percent at one point.

The Italian and Spanish 10-year yields also both jumped over 20% in one day.  They are getting close to U.S. levels now.  Even Japanese bonds took a hit, with the Japanese yield jumping higher.

The Swiss 10-year yield also rose out of negative territory, which is another story all its own.

Perhaps some of this is because of the situation in Greece.  Perhaps the markets are finally building in a slight expectation of inflation.  Perhaps people are realizing that government bonds are not always completely safe.

Just like China, I am not calling an end to a worldwide bond bubble.  At the same time though,  I can’t discount the possibility.  These were big moves in one day, already following previous big moves.

This is going to be a story to watch, so stay tuned.  The American press may not be giving a lot of coverage to foreign markets, but if these big moves continue, it is going to affect almost everyone, including American investors.

The bond bubble is going to pop at some point.  I am not ready to start shorting bonds, but this could get interesting if we see a few more days with big spikes in interest rates.