Salient to Investors:

The bond market expects inflation to remain contained for the next decade.

David Brownlee at Sentinel Asset Mgmt  said inflation is on the backburner until you see a strong economy, so rates will be relatively low.

Gregory Whiteley at DoubleLine Capital said the money created over the past few years will eventually cause an inflation problem, but not in 2012, 2013, 2104. Whiteley said 10-yr to 30-yr Treasuries will do well in the next 12 months.

Hedge funds et al are the most bullish on 30-year bond futures since November 2007.

Ian Lyngen at CRT Capital said a lack of wage growth has kept inflationary pressures limited, allowing the Fed to continue accommodation which has spurred the recovery more than we might otherwise have seen. CRT forecasts 10-yr yields will fluctuate between 1.4 percent and 2.5 percent in 2013.

Mitchell Stapley at Fifth Third Asset Mgmt sais some of the weakness in the dollar lays the groundwork for higher commodity prices, which will flow through into inflation rates.

Sean Hughes at Conning & Co. said it has worked out well from the Fed’s perspective to this point, but the concern is a longer-term one.

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