This week's commentary comes from Douglas Greenig of RBS Greenwich Capital in Greenwich, CT. I have been reading his material over the years and always find it solid and thought-provoking.
In this piece, we get one more look at Greenspan's "Conundrum." Douglas looks at some of Greenspan's arguments for the strange behavior of the bond market. He then offers up his own theory of why long rates have stayed low and why they are likely to remain there. Many market watchers, like Bill Gross of PIMCO, are starting to look at why long rates have stayed low and predicting they could go much lower. Douglas offers up some new ideas and that is why it was picked for this week's Outside the Box.
John Mauldin, Editor
Outside the Box
Outlook for Rates and the Curve
Alan Greenspan has swerved in the direction of the skid. After Federal Reserve officials had spent months trying, unsuccessfully, to jawbone the bond market lower, Greenspan has thrown in the towel by acknowledging that there must be powerful forces keeping long-term bond yields low.
In a speech to the International Monetary Conference in Beijing on June 6th, Greenspan noted: "The unusual behavior of…