The new normal we continue to hear about should refer to the rise of emerging markets as a percentage of global GDP and not the potential sub optimal growth of domestic U.S. GDP. Between 1960 and 2000, the GDP of emerging markets fluctuated between 18 and 22% of global growth. It was only most recently that they broke out to represent close to 30%, reflecting the importance of having a direct or indirect exposure to this important asset class. The key must be in balancing the associated risk and increased volatility that is inherent.
Has the bond bubble been pierced? The Fed has embarked upon QEII. The bond purchase program, that is, not the luxury cruise liner. So, with a constant buyer lurking in the market and one with an exceptionally deep set of pockets, why are rates rising?
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