Yes, I've been vexed on the bond market --my conclusion is that there is artificial demand. The demand is coming from central banks --both the FED which "floods" the market by buying government treasuries and foreign central banks, especially China/japan which print their domestic currencies, buy US dollars (due to trade deficit) from their own people, and then re-invest those dollars into treasuries. Inflation is NOT at 2% or whatever the FED is claiming. Inflation is closer to 10% currently --www.shadowstats.com does a great job at calculating inflation. This would usually mean that bond rates would rise ---but only in a free market. We do not have a free market --we have a highly manipulated market. Just do the math --the FED/China/Japan combined currently own roughly $3trillion of US debt. These three alone manipulate the market wildly. China has a peg to hold ---thus they print their money endlessly in order to buy dollars. Ask yourself one question ---what would the result be if the FED were to print $10 trillion and purchase all government debt? It would cause yields to collapse, while at the same time we would be in hyper-inflation as the dollar collapsed to zero. Obviously the current situation is not as bad, not even close, but an artificial demand is causing these low interest rates. 5% for 30 year debt ---are you SERIOUS with gold rising from $250 to $850 in the last 6 years, and oil exploding from $10 to $100 per barrel over the last 9 years?
I agree. Central Bankers around the World have ushered in a new era of loose credit. Literally. Japan. US. EC. China. All churning out $$