Is The Bond Market Delusion About to End?

In this weekend report I go over the mechanics of the bond market and how the price of bonds in the market determine interest rates and how central banks can influence bond yields but more so at the shorter end of the yield curve.

I note how the U.S. 10-year yield closed at a four-year high of 2.96% on Friday, April 20th, 2018 and how a break above the 3.0% level could signify trouble ahead for the financial markets, credit boom and the economy as a whole.

In spite of a ballooning of the U.S. national debt from 1980 to the present day we have witnessed a continuing downward trend in bond yields and a bull market in bond prices which has sustained the era of easy money and the credit bubbles of the last 37 years.

I look at the book entitled 'Extraordinary Popular Delusions" by Charles Mackay and ask whether the bull market in bonds we have seen since 1981 is one the biggest delusions of our times.

"Extraordinay Popular Delusions" by Charles Mackay: https://vantagepointtrading.com/wp-content/uploads/2010/05/Charles_Mackay-Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds.pdf