Greenspan the Bond Bear vs a Gross Bull

Former Fed Chairman, Alan Greenspan, the man who brought us the housing crisis, is warning us now that the bond market is a speculative bubble. Like many in the bond bear camp, he offers very little in terms of actual catalyst to sell, other than the fact that prices have gone up.

“Whenever you have a bull market, it looks as though it is never going to turn,” Greenspan, the second-longest serving Fed chairman, said in an interview on Bloomberg Television. “This is a classic case of a peak in a speculative security.”

On the other end of the spectrum is Bill Gross, former King of Bonds. He’s suggesting it’s nearly impossible to fight central banks, especially since they have an unlimited trove of cash and can print and buy print and buy for as long as they deem fit. There aren’t any checks and balances. They simply make the rules.

“The timing of a bond bear market has certainly been delayed,” Gross said in an interview on Bloomberg Television. The BOJ’s plan “provides what I call a soft cap on Treasuries and on gilts and on bunds,” and signals limited downside in terms of price. “You can’t fight central banks.”

In other words, why sell bonds now when rates aren’t going up and the market doesn’t seem to mind either? There is clearly a flight for yield that will continue tp permeate markets. Like it or not, bonds are the main beneficiary of these orphan dollars.