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To: Defrocked who wrote (53068)	8/4/1999 11:11:00 PM
From: Lymond	Read Replies (2) of 86076

Fixed income update: Do people watch anything besides the long bond? I have to laugh at all the commentary I read today about how the tech stocks swooned even though bonds "rallied" today. Listen, we saw nothing of the sort. Sure, the long bond did well. But this was for technical reasons, as Treasury announced that there would be no 30-year auction in November. Shorter maturities did not move much at all. Moreover, spreads continue to widen. 10-year swaps today traded at +105 -- an all time high for the 1990s -- while agency spreads remained at recent wides despite very strong demand for the new FNMA 5-yr deal. Corporates also continued to struggle in the face of sustained heavy supply. In short, the tone in fixed income markets remains overwhelmingly bearish. Fixed income spread valuations remain at historically cheap levels, while equities remain in la-la land, despite some recent pressure on the i-nuts. This, combined with the dollar's recent weakness, makes me think that stocks are extremely vulnerable right now. BWDIK.

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