March 12, 2018

Mar 12 23:03 2018 Print This Article

Guess who’s back?

E. Craig Coats Jr. never set out to be a bond vigilante.

As the former head of Salomon Brothers’ Treasuries desk, the last thing on his mind running the world’s biggest debt trader in the 1970s and 80s was fighting Washington’s fiscal largesse. He had a much simpler agenda: survive.

In an era when inflation outbreaks could send yields surging hundreds of basis points in a matter of days, getting stuck on the wrong side of the bond market could end your career. That’s why for Coats, any hint consumer prices were poised to spike was a sign to sell with both hands. The knock-on effect, of course, was that he inadvertently became a disciplinarian of American budgetary freewheeling, forcing officials to curb inflationary policies or risk an upward spiral in funding costs.

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PrefBlog

PrefBlog is presented as a public service by Hymas Investment Management Inc., Manager / Trustee of Malachite Aggressive Preferred Fundand publisher of PrefLetter, a monthly newsletter directed towards long term buy-and-hold retail investors. James Hymas, president of Hymas Investment Management Inc, with years of experience designing quantitative investment technology and applying this technology to conservative portfolios, seeks to provide institutions and retail investors with the information and advice necessary to produce top quartile returns in the preferred share market without the assumption of excess risk.

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