Bond Outlook June 3 2009

How remarkable that GM can file for bankruptcy protection, endangering hundreds of thousands of jobs, both directly and indirectly, and yet the stock market rally continues unabated. Maybe this best demonstrates the decoupling between financial market performance and the reality of the US economy. The stock market has just about recovered its 2009 losses, LIBOR and bond spreads have returned to normal, and long-term government yields are back to where they were before the crisis.