Tuesday, 01 August 2017 00:00

The Bond Bubble is Poised to Burst

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(New York)

One of the biggest names in bonds has just warned that the market looks set for huge losses. Former Fed chairman Alan Greenspan has just said that while stocks don’t look poised for a downturn, it will be a meteoric fall when bonds finally collapse. Greenspan said of bonds that “By any measure, real long-term interest rates are much too low and therefore unsustainable … When they move higher they are likely to move reasonably fast. We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace”. He continued, saying “We are moving into a different phase of the economy -- to a stagflation not seen since the 1970s. That is not good for asset prices”.

FINSUM: Greenspan’s reputation has been diminished greatly because of the Financial Crisis, but the man knows as much about rates and macroeconomics as anyone on the planet.

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