Jeff Gundlach is not the only person who is feeling “maximum negative” on Treasuries.
In an interview, none other than the “Maestro” Alan Greenspan, the man whose “great moderation” policy made the current global bond bubble possible, said that he is worried bond prices have risen too high.
Asked if he finds what is happened in the bond market right now “in any way, shape, or form concerning for financial stability”, Greenspan replied that “it’s obvious that you ought to be looking at the price earnings ratio in bonds to income. We get very nervous when the stock price index goes to high PE. We ought to be somewhat nervous when the bond rate does the same…. To believe that we can keep rates down here for very much longer strikes me as to say that human nature is going to change, and that’s one thing I wouldn’t bet on.”
He did not mention that the only reason why there continues to be such an unprecedented stampede into fixed income, pushing yields to record (negative) lows, is because investors are merely frontrunning central banks; they also know that as monetization accelerates and as private supply leave the market, the same central banks will purchase whatever bonds they can find at any price, and that is the only reason why global bond yields are where they are.