John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: MulhollandDrive who wrote (3746)	4/16/2001 3:27:40 PM
From: John Pitera	Read Replies (3) of 33421

I think that the Fed Funds traders have been listening to the FED Gov's who have been talking about a second half rebound and this notion that the economy feels worse than it is. The entire yield curve has been flattening and moving higher, which is bearish. The TYX.X (30 Year bond yield) has moved above it's 200 dma today for the first time since May of last year. Bonds and notes have gotten hammered the last 4 days......they obviously did not like the stock market rally. ----Moody's Investors Service reports that a record number of companies have been downgraded to the junk level (Ba1 and lower) from investment grade (Baa3 and higher) during Q1. 23 companies were downgraded during the quarter, however 11 of them were associated with the California power crisis. For this reason, the data does not suggest that credit quality is as bad as one might think. However, the previous record was 13, and if the 11 California downgrades are discounted, you are still left with 12 downgrades, which is dangerously close to the prior record. Of note, the number of firms upgraded from junk to investment grade was 10, higher than the 12 month average of 6.-------

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