Jim Grant on Bonds

Grant is always worth reading and after years of skepticism about the lofty equity valuations, he is in his element. Click the FT link below as he describes the mispricing in the bond market due to credit distortions and default fears.

Jim Grant writing in the FT:

Little logic to bond world amid current risk phobias

"There are no bad bonds, only bad prices," the traders used to say. They should say it again, only louder. In the spring of 1984, long-dated Treasuries went begging at yields of nearly 14 per cent in the context of an inflation rate of just 4 per cent. Those, too, were fearful times, the recollected horror being the great inflation of the 1970s. Inflation was ineradicable, the bondphobes said. Now a new generation of creditors espouses the opposite proposition. Deflation is baked in the cake, they say.