Part 4/9:
One of the core themes of the podcast was the prevailing pressures within the bond market. Fleckenstein predicts that until there is significant economic or stock market weakness, the bond market will remain under pressure. He speculates that a crisis could ultimately serve as a catalyst for necessary regulatory changes and economic reforms.
He expressed skepticism regarding bonds rallying under current conditions and highlighted that inflation’s real effects vary among different stakeholder groups. As such, higher rates seem likely given the absence of real improvement in the economic indicators. According to Fleckenstein, there isn’t an imminent prospect for lower rates extending beyond seven years unless prompted by economic contraction.