"Are you still maintaining that bonds have seen their secular yield lows? Hoisington Management which has been steadfastly bullish for nearly two decades(in 30 year zero coupon bonds), thinks bonds at 2.5% are cheap in this deflationary environment, and that you'll look back in a year's time and be misty for those generous yields."

David Fuller's view I think the bond yields of heavily indebted countries have either seen, or in the case of those countries which can print their own currency, are very near their yield lows for this cycle. Countries with strong balance sheets have the best scope for somewhat lower long-dated yields, in my opinion.

Government bond bulls in the USA and UK have had a splendid run but I would caution against extrapolations of deflationary pressures in these countries, not least as Mr Bernanke has vowed that he will prevent outright deflation from occurring in the USA.

Interestingly, regarding extrapolations of already historically low yields, if you click on the buttons link in Email 2 above, and then click on 'A', the caption for the eighth button is: "Avoid the Tyranny of Inflated Expectations."

(See also Friday's chart-illustrated comments on bonds.)