Nicely outlined, eshmun Your points reinforce and expand on what...

Nicely outlined, eshmun

Your points reinforce and expand on what i said - generally we are seeing the same thing.

What we appear to diverge on is that you see the ECB program as a continuing process of purchasing bonds that are in part being newly created.

As i understand it though, the actual mandate is that the ECB is to buy secondary market bonds - so it is buying bonds held post creation by 3rd parties - and effectively by creating more competition in the 'market' they stimulate lower yields.

So effectively the ECB QE acts as a cap on wholesale interest rates. At any point those bonds start to lose value the ECB will step in.

So thats why I say I dont necessarily see this as an immediate catalyst for a bond bubble pop!

And because of the deflationary impact of htose peripherals you mentioned, it seems likely that aggregate internal inflation and other upward yield drivers in the Eurozone will be deferred a number of years yet,

While Italin banks for eg might look like a disaster in the mix - all it requires is a simple policy shift from germany etc to move from bailin to bail out and the ECB funding immediately would address the key of those issues.

While the Germans will fight that all the way to the wire - as we saw with Greece - when it starts to threaten the overall Euro architecture the Germans will offer policy flexibility - though it will come with a stick price at some point in future.

There's no doubt there is massive overvaluation in global bonds. That has bubble all over it.

But until govt policy response flexibility is exhausted - which imo wont come until germany, us and france are facing a net budget deficit aroudn or in excess of gdp - its hard for me to see a really existential threat popping the bubble.

But thats doesn tmean ti wont happen. The things wound tight - likely will be one of those 'unknown unknown events' that fly out of left field faster than the policy framework can handle

I think thats pa rticularly where the ECB is likely the first point of danger - its committee nature means its responses are slowed - and there may come a time that creates a non underwritten exposure the overall bond marketplace will not countenance