We’ve been musing on the fate of US debt for some time now. It’s no secret that we’re bearish on the fate of US Treasurys and the buck. (It’s no accident, dear reader, that your editor lives outside the US of A. We see the threat of inflation on the horizon, a dark and foreboding cloud, and we don’t like it one bit.) And the mixed signals from China and Russia on their Treasury holdings doesn’t make us sleep any easier at night.

Despite signs that several segments of credit continue to improve, namely in the mortgage-backed and investment grade corporate bond market, the rest of the complex remains hostage to nervous money and the accelerated flight to safety in December.