Gekko

AS REGULAR readers know, I am very, very negative on the bond. I believe we entered a multi-year bear market at the beginning of the year. Later this year or next it will be blamed on “rising inflation,” but this will merely reflect the political weakness of the deficit-dependent officeholders who can’t get the support for the austerity programs they’ve announced.

Right at the moment, though, I think we’re almost due for a bounce in the bond market. While the selloff of ’96 has told us that the bear market has begun, there are some false rays of hope out there. Reported inflation is low, and the liquidation of the T-bonds bought with borrowed yen will slow at the Japanese year end of March 31. There’s a momentary pause in the deterioration of the U.S. political climate. While the Fed hesitates to cut in the wake of that phony jobs report in early March, I still think you can count on one more cut in the funds rate before the election season begins.

AS REGULAR readers know, I am very, very negative on the bond. I believe we entered a multi-year bear market at the beginning of the year. Later this year or next it will be blamed on “rising inflation,” but this will merely reflect the political weakness of the deficit-dependent officeholders who can’t get the support for the austerity programs they’ve announced.

Right at the moment, though, I think we’re almost due for a bounce in the bond market. While the selloff of ’96 has told us that the bear market has begun, there are some false rays of hope out there. Reported inflation is low, and the liquidation of the T-bonds bought with borrowed yen will slow at the Japanese year end of March 31. There’s a momentary pause in the deterioration of the U.S. political climate. While the Fed hesitates to cut in the wake of that phony jobs report in early March, I still think you can count on one more cut in the funds rate before the election season begins.