Bernanke puts a bid back in the bond market, but where will it end?
Is it possible the Fed’s muscles are getting weaker just at a time when it’s thinking about flexing them again?
At a time when so many classes of debt seem to be highly correlated as they rally, IndexUniverse.com’s fixed-income columnist wonders if the chance that all could correct at the same time is a bit too close for comfort.
Corporate bonds are behaving a lot differently now than in they were in 2008, when they were part of a credit-led meltdown in all financial markets. Now they’re outperforming equities and the only question is, will it last?
It’s hard to believe that going into 2010 a Barron’s sentiment survey was the most bearish it’s ever been on bond prices. The yield on the 30-year U.S. Treasury bond was 4.75 percent at the time of the survey and, since then, bond prices have rallied. Because yields move in the opposite direction to prices, the long bond is now yielding 4.22 percent. How did the crowd get it so wrong?
The IndexUniverse.com columnist who lived through the collapse of Bear Stearns takes measure of the huge deficits and asks whether throwing more money at the problem won’t make matters worse.
In his inaugural fixed-income column, ‘The Boiling Point,’ a former financial adviser who lived through the collapse of Bear Stearns likens the world economy to a top that risks falling over, no matter how fast policymakers try to make it spin.