“Interest rates have at least tended over the past 150 years to rise and fall in generational length intervals….  There is nothing scientific about this….  If the historical form holds, the greatest bond bull market might be succeeded by a bear market of some duration and power,” says Jim Grant.

Mr. Grant isn’t seeing “higher for longer.”  He is seeing “higher for much, much, much, much longer.”  He is also concerned about the “antique phrase” Public Credit of which Alexander Hamilton wrote about in 1791.  The U.S. is potentially issuing too much debt.  It could of course be repaid in “shinplasters” to use the Revolutionary War phrase; but to service the debt in good money, Congress and the Treasury should be careful not to issue too much.  He also believes we should remain “nice and liquid” to take advantage of Mr. Market’s opportunities.

Additionally, watch Japan in the coming weeks as monetary tensions rise with increasing inflation in a country with repressed interest rates.  And the Japanese are large investors in foreign markets.  If Japanese rates were to rise, would their investors pull out of foreign markets causing turmoil in the U.S. bond market?