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Biotech / Medical : Biotech Valuation
CRSP 53.33-0.4%Nov 26 3:59 PM EST
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To: Biomaven who wrote (3449)4/18/2001 2:26:08 PM
From: aknahow  Read Replies (1) of 52153
 
Continued Fed fund cuts are many times seen as bearish for the long bond. Great for shorter term instruments. Beyond a certain point lower short term rates beget worries about inflation. None of the previous means that rising short term rates are good for long term bond but there is a point where a serious increase by the fed can be seen as good news for long term bond buyers as it means the fed is serious about stopping inflation. <g>

Not that it matters but I agree with you about everything in the last paragraph. Biotechs have to invest on the short end and these rate cuts mean serious reductions of interest income. So serious that it may serve as an incentive for those that were going to buy another company or partner with cash milestones to move a bit faster. IMO it also means that the window on new financing is not shut that tightly as very low rates on safe investments lead to increased willingness to accept risk.
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