As we know, when the markets are in crisis, the stock exchanges drop until the price level has become so low as to make buyers think that the punishment has lasted long enough and it can only go up from there. It is not clear whether this point has been reached with regard to the stock markets, but, at least in America, there are those who think it has been reached with regard to the government securities markets.
Rates are too low, an analyst said, referring to yields on 10-year T-bonds, which had fallen to an all-time high of 2.12%. Indeed, the flight from risk that pushes investors towards safer havens such as US bonds (in defiance of the warnings of Standard & Poor's) can create other risks: by buying T-Bonds at these prices, it is almost certain that the prices will fall 10 years hence, as rates are abnormally low. Perhaps, when the danger of a fall in government bond prices worsens, funds will flow back to the stock market, which in the meantime – also taking into account the good profit season of US companies – has become more attractive.
