Monday, July 1, 2013

Bondmageddon Thoughts

Click to enlarge.


Source Data:
St. Louis Fed: 10-Year Treasury Constant Maturity Rate


Stagflationary Mark said...

I'm heading across the state to see my family this week.

Happy 4th everyone!

Stagflationary Mark said...

July 1, 2013
The Market Ticker: Understanding The Shift

There is a paradigm shift in the bond market...

As you can be seen from my post, I have a somewhat different opinion.

That's what makes a market I guess. If everyone agreed on everything then very little trading could take place.

Stagflationary Mark said...

Paradigm shift

When enough significant anomalies have accrued against a current paradigm, the scientific discipline is thrown into a state of crisis, according to Kuhn. During this crisis, new ideas, perhaps ones previously discarded, are tried. Eventually a new paradigm is formed, which gains its own new followers, and an intellectual "battle" takes place between the followers of the new paradigm and the hold-outs of the old paradigm.

I see a paradigm shift but it isn't in the bond market. It is the belief that the Fed's ZIRP has permanently put a stop to recessions. Based on what I'm seeing on CNBC, this belief seems amazingly widespread to me.

If I am right to think this way then we'll just have to see what rates do in the aftermath of the next recession. At that time (whenever it is), I fear we'll be stuck in ZIRP like an oversized motor home stuck in a mud pit. How's that for a pleasant retirement dream?

Let's hope I am wrong. Just opinions!

Stagflationary Mark said...

As you can be seen from my post?

I really need to proofread more.

I was torn between "as you can see from my post" and "as can be seen from my post". I guess I compromised poorly, lol. Sigh.

Luke Smith said...

Gold be dropping.

mab said...


Based on what I'm seeing on CNBC, this belief seems amazingly widespread to me.

CNBC is proof that Orwell was an optimist!

Lies and distortions make markets. Always lies, lies and more lies. Americans love to feed on lies.

The tech bubble, mortgage bubble, private (in)equity, etc. aren't policy failures or mistakes they're rackets. And behind every racket is a fortune and a vested interest.

The War on terror, the War on drugs, the War on poverty, etc. are all rackets.

Stagflationary Mark said...


CNBC is proof that Orwell was an optimist!

I cannot refute your claim, lol.