Monday, October 20, 2014

Deflation may be on the horizon

The bond market is manipulated by central bank buying of government debt. Yields are lower than they would otherwise be if the Fed and other central banks didn't buy them. 

Secondly, the decline in yields may be a sign that bonds buyers don't believe in the global recovery story when it comes to the economy. In fact, the low yields on bonds would suggest that we may be entering a period of deflation.