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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Mike Johnston who wrote (69382)	9/6/2006 2:39:49 PM
From: Gemlaoshi	Respond to of 110194

How high will inflation have to go in order for the bond market to buckle ? The level of inflation won't matter as long as complacency reigns that bond risk is adequately hedged. Bond traders know that there is inflation and credit quality risk to account for, but they all think they are hedged against such risk. The crack will come with a credit derivatives (probably CDS) breakdown that shows that risk is terribly mispriced. It will be reminisent of the portfolio insurance debacle of the 80's, only several times larger. Dave