Bond Holders will Blame Others for Their Losses

Pointing finger blaming others

QUESTION: Hello Martin

I am beside myself when I look at the disconnect that we are seeing in relation to the US equity market and the US bond market.

 

Are the bond traders and holders of Bonds going to hold them and incur losses from here on in or will they wake up

and look for a better return?

 

R

ANSWER: Yes. The rating agencies still regard government debt as less risky than corporate. Therefore, pension funds who sell off government debt and replace it with corporate, face argument with rating agencies. The bulk of government debt will undermine pension funds and banks as we move through this crisis. They are victims of tradition and nonsense. They will suffer losses and blame others.

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