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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: valueminded who wrote (37109)	9/14/2005 9:26:36 AM
From: SouthFloridaGuy	Read Replies (2) \| Respond to of 116555

Bond prices have been in a 23 year bull market that has coincided with increasing levels of debt and hence higher sensivity to upward changes in real-rates. Likewise, bond prices were in a multi-year bear market in the 70's that coincided with both the liquidation and monetization of debts (which was not nearly the level it was now). It took sustained real interest rates of 8%+ to break inflation. It will take the EXACT same to break what we are in now. It can either happen by the Fed catalyzing a recession by jacking up real-rates or it can happen by massive debt liquidation and falling CPI which raises real-rates. Apprently the Fed chooses the latter which is why this cycle has been so prolonged.