SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Pastimes : The Naked Truth - Big Kahuna a Myth
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Joan Osland Graffius who wrote (52855)7/23/1999 10:17:00 AM
From: Lymond  Read Replies (1) of 86076
 
Much hinges on how stocks behave. If equities continue to hold up, I would remain bearish on Treasuries. Inflation pressures are clearly rising, which will ultimately force the Fed's hand.

Unlike last year, spread widening has not been accompanied by a flight to quality into Treasuries. The issue in spread markets right now is one of supply/demand liquidity imbalance, not fears of deteriorating credit fundamentals. Dealers are extremely reluctant to take on paper, so when buyers step away, spreads are allowed to drift out until equilibrium is reestablished. That said, financial system risks are obviously increasing. If this spread widening persists, I think Treasurys would catch much more of a flight to quality bid. And if stocks crack, Treasuries would rally sharply.

I know this sounds like a wishy washy view, but there are alot of counterbalancing forces at work.

Positives for Treasurys:
Spread widening/financial system risks increasing
Increased demand for liquidity & quality as we approach year-end
Stocks finally cracking (if.....when...)

Negatives for Treasurys:
Stocks remaining strong (don't they always?)
Rising inflation risks/Fed tightening
Rebound in global growth (related to rising inflation risks)
Weakening dollar (watch this one closely!)

My conclusion: Stay fairly short on the curve. You're not being paid alot to extend maturities at this point, and many stars need to align to cause a big rate rally.

Thanks for the link on Korea. Still a big mess to clean up over there, IMO

Regards, John
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News