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The Bizarre Pricing of Bonds

|Includes: ProShares UltraShort 20+ Year Treasury ETF (TBT)

Bonds rallied on the prospect of QE2, because it implies the authorities buying bonds. But isn't QE2 supposed to combat deflation? Without deflation the current levels of yields are surely unattractive. So the only conclusion has to be that bonds are priced for QE2 to happen, but fail.

Disclosure: NA