>Points well taken. But do you think there is a chance that the
>otherwise inexplicable view you saw yesterday -- that there are
>elements of the bond market that consider Bernanke inflationary --
>may indeed flow from a memory his 2002 speech? It was indeed
>somewhat aggressive and unorthodox. Most in the stocks would say it
>was those things in a good way. It doesn't seem far-fetched that
>bondholders might think it was those things in a bad way -- i.e,.
>too afraid of deflation risk and not afraid enough of inflation risk
>= soft on inflation.
Yup, that's probably it. You'd think that an inflation target would work both ways - the central bank would take action when inflation fell below it as well as when it exceeded it. US markets have often been critical of the Bank of Japan for not being aggressive enough in fighting their deflation. But these guys aren't big thinkers.
Yesterday's FT pointed out that the bond market reaction to Greenspan's appointment was more negative than Bernnake's. They just hate change.
Doug