At this point it is just funny really...
What do bonds know?
It seems the doves are winning - because the economy is dismal...
Or is the world now betting on the next round of QE? Buying bonds, buying stocks, buying gold, and selling USDollars?
In the long run, as someone once said, we are all dead, but in the meantime, as BofAML's Michael Hartnett provides a stunning tour de force of the last 5000 years illustrates long-run trends in the return, volatility, valuation & ownership of financial assets, interest rates & bond yields, economic growth, inflation & debt...
By Don Quijones, Spain & Mexico, editor at Wolf Street.
Next Banking Scandal Explodes in Spain
Heading into last month's 10 Year auction, there was a surprising development: the 10Y paper was trading super special in repo as a result of pervasive shortages. This time, however, this did not happen and in fact after trading tight in repo, earlier today, 10Y actually had a positive sign suggesting perhaps some weakness going into today's auction.
As global growth expectations collapse, so do bond yields (now at new record lows for developed markets) but that doesn't stop equity 'investors' from piling into already richly-valued stocks on the hope that next year will be the year when global macro and micro hockey-stick projections will work out...
With a P/E of 21, global stocks have rarely (outside of the financial crisis) been as expensive... Which may explain why some investors are piling into bonds, no matter how low the yield.