Saturday, January 9, 2010

A bond bubble? A gilt bubble?

The Bond Bubble

we shall see - interesting comments at the bottom of the article. Its not loaded with technicals.

Posted by techieman @ 10:39 AM (954 views)
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2 thoughts on “A bond bubble? A gilt bubble?

  • Hi techieman
    What are thoughts on the likelihood of this happening? The article seems very blunt, but there have been plenty of similar suggestions around lately. I suppose this would have a lot to do with China and its currency peg against the dollar and what happens there.

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  • hi LTF- this is interesting because Daneric also believes in deflation, and appreciation of the dollar. He reconciles this with a movement in the curve itself. (higher yeild at the long end and lower at the short end). Basically his point is this : “The 30 year chart shows prices [the 30 year long bond] heading down on a P3 wave this year likely.” You probably know that “P3” means primary wave 3. I could give you a link to an explanation of what that means if you like.

    Honestly i have not given this any thought (i accept i probably should but i really haven’t) so i would need to spend time thinking about it. The only thing i would say is that i have said for a while that the Gilts would fall (yield increase) not because of an inflation risk but because of the funding requirements. Which incidentally i think will have a knock on effect on Mortgage Interest rates, regardless of base.

    I used to trade t-bonds quite a lot and was pretty successful, but that was a while back now.

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