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To: Lymond who wrote (52860)	7/23/1999 11:15:00 AM
From: John Pitera	Read Replies (1) of 86076

John, Excellent Post, there are several counterbalancing influences on the Treasury mkt currently -ng- f 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.

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