A tweet from a really solid follow - @interestarb - highlighted one of the topics we covered in Dallas with Blake Morrow and Wizetrade. The astute @interestarb noted the insane popularity of peripheral European bonds at paltry yields. In Dallas, I referenced the early 80's when yields well above the nominal growth rate were shunned. Henry Kaufman - Dr. Doom -of Solomon Bros. (#GIK) coined the phrase "Certificates of Confiscation." As the young pit broker for Dean Witter Reynolds cash desk, I was sometimes asked for an opinion- usually when the desk was well under water. "I think they trade well, I'd say," sheepishly hedging. "I think we should buy some."
"Someone tell the kid, we don't buy this stuff." would be the jab over the Hoot-n-Holler. An entire generation of traders knew only how to short.
Flash forward to today. Bonds of dubious heritage and zero/negative real rates are hoarded. ETF products promulgate the "renter" class for the asset. Several years ago, I coined the term CANs, for Capital Appreciation Notes. This is what happens at cycle peaks and troughs. In fact, it MUST happen. The universe self corrects, And we don't buy.