Unstoppable $100 Trillion Bond Market Renders Models Useless

[interestrateripoff]

http://www.bloomberg.com/news/2014-06-01/the-unstoppable-100-trillion-bond-market-renders-models-useless.html

If the insatiable demand for bonds has upended the models you use to value them, you’re not alone.

Just last month, researchers at the Federal Reserve Bank of New York retooled a gauge of relative yields on Treasuries, casting aside three decades of data that incorporated estimates for market rates from professional forecasters. Priya Misra, the head of U.S. rates strategy at Bank of America Corp., says a risk metric she’s relied on hasn’t worked since March.

After unprecedented stimulus by the Fed and other central banks made many traditional models useless, investors and analysts alike are having to reshape their understanding of cheap and expensive as the global market for bonds balloons to $100 trillion. With the world’s biggest economies struggling to grow and inflation nowhere in sight, catchphrases such as “new neutral” and “no normal” are gaining currency to describe a reality where bonds are rallying the most in a decade.

The models don't work, who'd have thought that!

Shocking news.

[zugzwang]

The traditional models have always been garbage which is why none of these halfwits saw the crash coming in 2008 or has been able to furnish a credible explanation for the unrecovery that's followed since.

[katchytitle]

Read Martin Armstrong's posts - its all there. Cycles change, trends change, money will continue to flow into real estate and the stock market.