from Barron's:
<<< Richmond Fed President Al Broaddus said: "It doesn't seem to me the economy has started its initial approach" toward a gentle landing. In fact, he added, "Some of the recent data suggest the economy is like an airplane climbing to a higher altitude." >>>
How high, New York? We're never coming down. -ggg-
On a more serious note:
<<< But Jim Bianco thinks the weakness in spread markets can be traced back to early 1997. And the explanation may be found in the swaps market. For most
of the 'Nineties, swap spreads and interest rates moved in lockstep with one
another. Exceptions to this relationship were when credit concerns dominated
trading in swap spreads. Examples include the 1990-91 recession, the Asian
financial crisis in 1997 and Russia's meltdown a year later. During each of
these episodes, bond yields fell and swap spreads widened, producing a
negative correlation.
Starting about three years ago, the correlation between interest rates and
swap spreads started to weaken. And despite the roaring economy, the link
hasn't returned. The reason, according to Bianco, is an overriding fear of
systemic or credit risk in the economy. And that's why Treasuries, the
highest-quality securities in the world, have been the best performing U.S.
fixed-income class. >>> |
