Despite a massive post-Brexit recovery rally in the global equity markets that should have calmed investors, we've instead seen another flight to safety into U.S. Treasuries, even as the 10-year yield continues to plunge. Despite it's puny 1.43% yield, investors continue their near-panic demand for longer-term Treasury paper.
Furthermore, Friday's low yield tested the prior all-time low established on July 25, 2012, at 1.38%.
If we didn't know better, we'd think that the world economy in general, and the U.S. in particular, were headed for or are already in a deflationary recession -- aka 'depression'.
The fact is that most analysts and strategists suggest either that the U.S. is relatively healthy at its anemic 2% GDP, or that it is in fact strengthening, which will require higher rates sooner than later.
From my perspective, all the Fed's many experiments with easy money, QE and bond-market tinkering have created distortions that have forced investors into lite-yielding bonds and overvalued equities.
Congrats to the Fed. Mission accomplished! There is nowhere for investors to make a return in stocks and bonds unless they are prepared to undertake enormous and still rising risk.
This contrived situation will end badly. Where? Nobody knows.
