Every month I read the outstanding commentary by Bill Gross, Paul McCulley and others at PIMCO. This month they have comments by Chris P. Dialynas, Managing Director, Portfolio Manager and Senior Member of PIMCO's Investment Strategy Group.
Dialynas offers his views on the flat yield curve, the new Bernanke era and the theory of a global glut of savings. He sees a global economy awash in liquidity due to the increased risk of investment and the Chinese currency being pegged to the US Dollar. This has caused inflation to show up in some places and the imbalances in the world give Bernanke an extraordinary challenge and that is why it was picked for this week's Outside the Box.
John Mauldin, Editor
Outside the Box
Yield Curve Conundrum
Q: Incoming U.S. Fed Chairman Ben Bernanke has suggested that today's relatively low interest rates are the result of a global savings glut that is flowing into U.S. and global bonds. What are your thoughts on the "savings glut" theory?
Dialynas: The idea of the savings glut is that there is an abundance of savings in the world and that this abundance…