Just when you think it can’t get any stranger, the U.S. economy – measured by the declining number of full-time jobs, lower household incomes and below target inflation rate – seems to be weakening, while the most speculative asset markets lurch back into full-tilt bubble mode. Home prices in Vegas, Silicon Valley, and Miami are above 2007 levels, equities are near all-time highs, and bank stocks are once again dominant in the S&P 500. It’s as if 2008/2009 never happened. And now this from Bloomberg, about the return of junk bonds:
Bond Hubris Overwhelms Fed in Riskiest Credit-Market Sectors
Bond investors trying to divine when the Federal Reserve will reduce its unprecedented monetary stimulus are increasingly looking to the riskiest parts of the debt market, which are booming like before the financial crisis.
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