The end of quantitative easing will cause a flight from risk, Edwards argues. And that will mean that even as the Fed stops buying long-dated Treasuries, new buyers will come into the market. Prices go up, yields plummet.
"The printing presses being turned off will hit risk assets hard and that should boost Treasuries. So in my world, 400 on the S&P goes hand-in-hand with lower, not higher US bond yields.
Ultimately I would concur that there is also going to be “The Great Reset” on US yields as well, but that will come after a frenzied orgy of balance sheet debauchment (both Fed and Federal) which will make events over the last three years look like an afternoon tea-party with the Vestal Virgins," Edwards writes in a note quoted by FT Alphaville.
This is a point we've raised here a number of times, after we first encountered it at Business Insider.
The idea is actually very simple: the end of QE2 will lead to fear, and people by Treasuries when they are fearful.
Questions? Comments? Email us atNetNet@cnbc.com
Follow John on Twitter @ twitter.com/Carney
Follow NetNet on Twitter @ twitter.com/CNBCnetnet
Facebook us @ www.facebook.com/NetNetCNBC