Does the recent widening of government bond yields, especially in Japan, signal the bursting of the bond bubble? I think not. Both the equity and bond markets are bubbles and both will burst eventually. But equities are more likely to pop first.
Meanwhile, the fate of the world economy hangs on bubbles that depend on global optimism. This can’t last for ever. It contains the seeds of its own undoing since prices are sent to economically unsustainable heights.
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