All Clowns Must Be Destroyed Message Board

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Pastimes : All Clowns Must Be Destroyed

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To: Defrocked who wrote (29745)	4/27/2000 1:25:00 PM
From: Lymond	Read Replies (2) of 42523

Yup, I think Greeny's cover is gone; he's got to step up the pace. The only thing IMO that would stay his hand from going 50 bps at this point is a rapid stock meltdown; and even here, I believe the threshold in terms of index levels are lower than they were previously. The scary thing? A lot of stock bulls are starting to argue that the Naz rally in the face of these numbers means the bottom is in. Maybe so, but it's an absolutely huge leap of faith IMO to presume that. (Edit: and I for one, don't.) I think we'll see 100 bps of tightening at the very least , and we've gotta start considering the possibility of funds going to 7.5-8+%. Technicals remain very supportive at the long end of the curve, so we'll probably see further flattening (inversion) if this plays out. But I think long-end yields are going higher in any event(bonds to 6.50% perhaps?). An issue to bear in mind: Everyone's got the same curve flattening trade on (short 2s, long the long end), so it's possible we could see some real damage at the back end if people get panicked into unwinds. Either way, I'd rather short 5s or 10s; where the technicals are less dangerous, especially if Treasury eliminates 30 year auctions as some are speculating.

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