Fed Policy

A -post collection

Structural reform needed and a global bond bubble set to burst?

Global Bonds are clearly in a bubble. It has been said that a bubble cannot be a bubble unless there is greed and speculation. How could that be the case in the Government bond market? Below is the graph of the TLT ETF, which tracks the price of the 20 YR Treasury bond Index. Note the comparison in the rate of change to that which happened in the real crisis of 2008-09. Generally speaking markets accelerate near the beginning and the end of a major move. This is clearly not the beginning. Even in 2008-09 it is hard to argue that the parabolic move was predictive of the economic situation. This is because the move did not really begin until November of 2008. Two years after

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An important test for all markets

As we have been calling for since the end of last year, there is indeed regime change in the markets. Our point was that the framework of the interest rate deck has changed. The next several years will be different because of this. What it means obviously is yet to be determined. But what really strikes me when I look at this chart below is this: The beginning of this enviornment was when we were reeling from the crisis. Frankly, at the time most of the market participants thought we were still deeply IN it. That is when Mohammed El Erian coined the term "New Normal". It was my opinion that term was really a pejorative for "cant really grow anymore". Well,

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