Joan, The really odd thing is that, historically, we see first a flat and then an inverted yield curve when inflation is roaring. Supposedly, we do not have any inflation and yet, the yield curve is flat. And you hear the permabulls talking about the huge positive "real yield" after taxes and inflation. My guess is that the pros who run the bond and short term markets are well aware of runaway asset inflation and that is built into the curve.
For awhile, there was not even much of a yield pickup for going out in time on junk issues. But, in the last couple of months, junks have started to fade a bit.
My guess is that, as usual, bond players are smarter than stock players and they see the insanity in today's valuations. But, then, as a guy who ran one of the largest bond funds in the world, I might be a wee bit prejudiced. When I managed stock portfolios, I thought bond management is what you did if you were too dumb to manage stocks. <G>
MB |
