Convincing the bond markets

caroline baum

Why bond traders are choosing to give the Federal Reserve the cold shoulder

Federal Reserve officials are working hard to convince the bond market that short-term rates are not going up anytime soon. Those pesky bond traders just will not listen. Why is that? "The bond market isn't buying it because the Fed is arguing a set of statistics and outcomes the market just doesn't see,'' says Jim Bianco, president of Bianco Research in Chicago. With stocks at 52-week highs, commodity prices soaring, inflation expectations (derived from inflation-indexed bonds) near three-year highs and talk of 5% GDP growth, "the bond market is scratching its collective head," says Bianc...