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  • 2016 is almost over. Here on Wall Street.

  • Here is 2017 in a minute.

  • The bond market certainly appearses it's turning 2016,

  • bond yields hit a bottom and started rising very dramatically.

  • Can we be sure that that trend will be relied on in 2017?

  • Well first of all, take a look at inflation expectations,

  • yes, they certainly seemed to turn up with very significantly,

  • most obviously, in the States, but also in Germany and in Japan.

  • If that continues then it's difficult for bond yields to keep at their still remarkably low levels.

  • Second critical dimension is the behaviour of central banks.

  • Herewith see what the proportionate changes the three big central banks have made to their balance sheets over the last decade.

  • You can see that the federal reserve has now stopped trying to administer the new stimulus

  • that's not true of either the bank of Japan or the ECB.

  • The critical question is are they really going to stop or taper off their support for the bond markets.

  • If they don't it's still hard even now it'll be that bearish about bonds.

  • That's the New York Minute.

2016 is almost over. Here on Wall Street.

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