http://www.arena.org.au/2001/10/habeas-corpus/ the website of left political, social and cultural commentary Sat, 11 May 2013 16:24:57 +0000 hourly 1 http://wordpress.org/?v=3.4.2 http://www.arena.org.au/2001/10/habeas-corpus/comment-page-1/#comment-1444 Kader Wed, 21 Mar 2012 13:59:42 +0000 http://www.arena.org.au/?p=274#comment-1444 it is simply pnrciig in a repeat of the experience of the past decade And that is indeed a very optimistic scenario when you consider that the next decade will be very different. It will be about deleveraging or the attempt to deleverage in the case of governments, possibly monetary inflation (Bernanke seems pretty determined to push it up) and rising commodity prices, a story of production not keeping pace with soaring demand from emerging markets.But maybe bond market aren t pnrciig in anything particular, these are after all strange times. It might be that at this juncture it s just a case of investors seeking refuge in what they believe to be safest due to the ongoing economic uncertainty. How many buyers of 10-year bonds really intend to keep them until maturity on yields of around 3%? besides the world moves on and changes as do markets. My feeling is that once investors are again confident about the economy and who knowns when that will happen they will probably flock back to equities or commodities (with the prospect of growth) and dump low yielding fixed income securities, which probably don t have that much further on the upside, unless we appear to be heading back to oblivion again, then you could see 10-yr yields down to 2% or lower, at least for a while. One thing that almost seems certain is that buying sovereign fixed income investments now is risky, probably as risky as equities, because we re at the bottom of the interest rate / inflation cycle (in the US at least) again who knows when it will turn but when it does they could have a long way to fall. A 10-yr quality sov bond yielding 5-6% in 2-4 years from now doesn t seem beyond the realms of reality! That would also be a big capital loss for anyone who bought those bonds recently.. it is simply pnrciig in a repeat of the experience of the past decade And that is indeed a very optimistic scenario when you consider that the next decade will be very different. It will be about deleveraging or the attempt to deleverage in the case of governments, possibly monetary inflation (Bernanke seems pretty determined to push it up) and rising commodity prices, a story of production not keeping pace with soaring demand from emerging markets.But maybe bond market aren t pnrciig in anything particular, these are after all strange times. It might be that at this juncture it s just a case of investors seeking refuge in what they believe to be safest due to the ongoing economic uncertainty. How many buyers of 10-year bonds really intend to keep them until maturity on yields of around 3%? besides the world moves on and changes as do markets. My feeling is that once investors are again confident about the economy and who knowns when that will happen they will probably flock back to equities or commodities (with the prospect of growth) and dump low yielding fixed income securities, which probably don t have that much further on the upside, unless we appear to be heading back to oblivion again, then you could see 10-yr yields down to 2% or lower, at least for a while. One thing that almost seems certain is that buying sovereign fixed income investments now is risky, probably as risky as equities, because we re at the bottom of the interest rate / inflation cycle (in the US at least) again who knows when it will turn but when it does they could have a long way to fall. A 10-yr quality sov bond yielding 5-6% in 2-4 years from now doesn t seem beyond the realms of reality! That would also be a big capital loss for anyone who bought those bonds recently..

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