|CBOE 10-year Treasury Yield Index (freestockcharts.com)|
In the beginning of the interview, Prechter explained why he believes credit risk will rise across all bond classes (from high yield bonds to munis). And he even thinks credit risk will eventually spread to Treasury bonds, which means he thinks credit downgrades will eventually matter and printing money won't help a solvency crisis. Right? His call makes sense that the thirty year bull market in Treasury bonds is in the process of topping out (or yields in the process of bottoming, see the chart), but what will be the catalyst that brings bond vigilantes to the Treasury bond market during a deflationary depression?
Here is Robert Prechter making the case that Treasury yields are bottoming out.