Michael B. Krause

The Treasury Bond Bubble

Good points.. The bond bubble is just that, but will of course occur at the expense of every asset class.

I too think bond prices (like you say) are a function of a ton of cash seeking a safe, 'politically correct', home --- more than correctly gauging inflation. You could say a function of increasing money supply to address aggregate demand and bank reserve requirement issues (which the fed and other central banks manage/interact with).

The long bond is saying that we are at the end of this round of inflationary spike, if you are to infer any message there. My hunch is that the long bond will start to break current resistance when it sees crude oil plummet. Crude oil will guide most of the entire commodity complex (ags and most energy at least), since so much of the world foodstock issues are dictated and correlated by crude demand [oversimplification: corn is overplanted due to ethanol subsidies, wheat and soy complex becomes underplanted, etc etc].