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bond vigilantes

Too Much (about) Taper, Not (yet) Too Many Treasuries

By |2021-09-10T20:01:04-04:00September 10th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Almost universally, the comeback is always QE. Whenever trying to discuss the bond market’s unmovable pessimism in 2021, especially now about six months after reflation ended, people just don’t want to hear about such low (and lower) growth and inflation expectations in nominal yields. No, that’s not deflationary potential, they’d say, it was and is the Fed buying bonds which [...]

The Durable Hibernating of Vigilantism

By |2021-04-20T18:49:58-04:00April 20th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

When their paper came out in January 2010, Carmen Reinhart and Kenneth Rogoff put a number on bond vigilantism as it had been known in prior history. The idea behind investor fickleness was simple and intuitive: profligate governments who finance their ill spending ways by borrowing will literally end up paying the price once the exceed common sense. And when [...]

They’ve Gone Too Far (or have they?)

By |2021-01-06T19:53:13-05:00January 6th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Between November 1998 and February 1999, Japan’s government bond (JGB) market was utterly decimated. You want to find an historical example of a real bond rout (no caps nor exclamations necessary), take a look at what happened during those three exhilarating (if you were a government official) months. The JGB 10-year yield had dropped to a low of just 77.2 [...]

Collateral Shortage > Bond Vigilantism (and it’s not even close)

By |2020-03-23T19:22:36-04:00March 23rd, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Faced with severe economic distress and a global market meltdown, they promised that it would be big. Massive fiscal “stimulus”, however, might come at a price. In the short run it was necessary, according to the orthodox view. When a crisis shows up you don’t worry about how to pay for things. Once all is said and done, the current [...]

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