Debating the notion are Paul Thursby the co-manager of the Thames River Global Bond Fund, an absolute return bond fund, and the stock-market historian, Russell Napier.

Both believe strongly that investors should exit all core government bond positions and indeed short these bonds. They have unrelated arguments for believing this to be the case. Paul Thursby believes that the likelihood of nominal GDP growth of 4% in the US means that 10-year US Treasury yields of 2% are dangerously overvalued. Even if the Fed were to continue to ease policy, the lack of both inflation and fiscal credibility will soon undermine the bond market. Russell Napier’s beliefs centre on the prospect of much reduced demand for bonds as China’s current account surplus dries up: its currency fully valued and growth slowing. This, combined with a halt in Fed purchases, will create a significant gap in demand, exposing prices to significant falls, perhaps even a crash.

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