tag:blogger.com,1999:blog-6616959642391988608.post3347647819363470417..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: Bond market optimism?Scott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-6616959642391988608.post-49051970749205410712009-03-03T09:16:00.000-08:002009-03-03T09:16:00.000-08:00Other credit markets -- investment grade corporate...Other credit markets -- investment grade corporates, high yield debt, secured bank loans, libor -- reinforce what Scott says about rising government yields indicating a return to some normalcy and growth. All of these markets -- especially high grade debt -- have improved markedly from the Armaggedon-like conditions that prevailed in the fall.Don Harrisonhttps://www.blogger.com/profile/17754112569609750210noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-28976000138847045102009-03-03T00:09:00.000-08:002009-03-03T00:09:00.000-08:00Mark: For one, the money never actually moves from...Mark: For one, the money never actually moves from one market to another, even though that's what most people believe happens. What really happens is that investors try to shift out of one asset and into another, and that causes relative prices to change.<BR/><BR/>If bond and stock prices are falling, then it is reasonable to think that people are trying to move to cash, or to gold, or to some Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-3811760063462651332009-03-03T00:06:00.000-08:002009-03-03T00:06:00.000-08:00Bob: The bond market has a knee jerk reaction to c...Bob: The bond market has a knee jerk reaction to changes in the outlook for growth. If the economy gets weak, the bond market automatically expects interest rates to fall (and bond prices to rise) because a weak economy supposedly means lower inflation and an easier Fed.<BR/><BR/>This is not always the right thing to expect, but more often than not, that is how the bond market reacts to news Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-16648251809146347192009-03-02T22:58:00.000-08:002009-03-02T22:58:00.000-08:00Scott,Been a fan of your for about six months. Alw...Scott,<BR/>Been a fan of your for about six months. Always a pleasure. Question: if bond prices are falling and stocks are falling, where is the money going to?mdelphttps://www.blogger.com/profile/05144952014455810632noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-32079246062041287002009-03-02T20:29:00.000-08:002009-03-02T20:29:00.000-08:00Scott,You said "Rising prices for Treasuries typic...Scott,<BR/><BR/>You said "Rising prices for Treasuries typically reflect a market that sees less growth ahead"<BR/><BR/>Can you pls explain why this is so?<BR/><BR/>thxbob wrighthttps://www.blogger.com/profile/09546025277161775062noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-54033359711455337082009-03-02T17:48:00.000-08:002009-03-02T17:48:00.000-08:00dave: good point about gold. Gold and bonds have b...dave: good point about gold. Gold and bonds have been telling diverging stories for some time now. I've thought that bonds were clearly underestimating the inflation that gold was pointing to, and overestimating deflation risks. The bond market is not always right. Bonds underestimated inflation risk all throughout the 1970s for example, even as gold was rising.<BR/><BR/>Gold is likely signaling Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-7644999071000033542009-03-02T15:57:00.000-08:002009-03-02T15:57:00.000-08:00Hi Scott,I'm wondering why you never post or revie...Hi Scott,<BR/>I'm wondering why you never post or review the long term data on net consumer debt. Even when removing record low home euqity, comsumers have more debt as a percent of disposable income than ever before. Isn't this at the root of the crisis we face?<BR/>Thanks,<BR/>MarkMark Gerberhttps://www.blogger.com/profile/07980096984624964261noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-33685333215024803312009-03-02T14:02:00.000-08:002009-03-02T14:02:00.000-08:00Thanks Scott for pointing out thebetter economic d...Thanks Scott for pointing out the<BR/>better economic data in this difficult environment.I believe you<BR/>are right.broderohttps://www.blogger.com/profile/12296214283216386700noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-24663021717493777802009-03-02T12:51:00.000-08:002009-03-02T12:51:00.000-08:00Scott,I'm having trouble understanding the concern...Scott,<BR/>I'm having trouble understanding the concern about deflation with gold near an all time high, If anything my concern is inflation . Am I missing something ?davehttps://www.blogger.com/profile/01173750820649272172noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-89862526996498457352009-03-02T11:50:00.000-08:002009-03-02T11:50:00.000-08:00Three things could drive up bond yields in this ma...Three things could drive up bond yields in this market: a) higher inflation expectations (or the equivalent, reduced deflation expectations) and b) higher growth expectations, and c) massive Treasury issuance.<BR/><BR/>I take the view to begin with that Treasury issuance fears have so far been overwhelmed by depression and deflation fears. If deflation and depression really took hold, the Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-9074480608929006662009-03-02T11:16:00.000-08:002009-03-02T11:16:00.000-08:00The contrary view as I understand it, from for exa...The contrary view as I understand it, from for example, Stephanie Pomboy and John Hermann (Hermann Forecasting), is that the bond market is looking through even a dire economy and pricing in inflation/over supply of treasuries in the future. In other words, a horrible economy but an even more horrible outlook for yields in the future based on inflating the money supply. My apologies to Pomboy M Millerhttps://www.blogger.com/profile/05762326550608359675noreply@blogger.com