The Bond Bear Market Of 2014 Has Been Delayed

Strategists went into 2014 with a consensus bearish view on bonds (as was also the case in 2010-2013...). The market action so far has not been kind to that view, with yields plunging in the developed markets. It may be that I have fallen into a too mellow summertime mood, but my guess is that this is largely a squeeze of the bond bears during quiet markets (although there are obvious geopolitical concerns).

OECD Delusional About Japan (Again)

Yet another "stronger growth in the second half of our forecast horizon"outlook, this time by the OECD. The headlines for the latest OECD Economic Outlook highlighted the danger of slowing developing economies, and so they have notched down their 2013-2014 global growth forecasts by 0.4%. But, as one has come to expect, stronger growth awaits at the back end of their forecast horizon:  2013, 2014, 2015 annual global growth rates are forecast to be 2.7%, 2.6%, 3.9% respectively.

I do not follow the developing economies enough to comment on the global forecast, but I am not too optimistic about accelerating growth in the developed economies. The euro area is a horror show of misguided policies. In other regions, the action of increased tax payments in response to nominal growth should help keep growth stabilised near its present pace. And I  may be missing something, but the capital expenditures cycle already looks mature.

However, the OECD analysis for Japan is particularly weak.