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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Joan Osland Graffius who wrote (122966)9/17/2001 4:56:52 PM
From: Mark Adams  Read Replies (1) of 436258
 
FWIW

PaineWebber notes that insurance companies are likely to become forced sellers of bonds to meet rising claims (see "Assessing the Aftermath"). While this would be a negative, insurance company holdings account for less than 2% of the fixed income market and the timing of their sales is uncertain. Foreign investors, which hold nearly 1/3 of the Treasury market and about 22% of the U.S. corporate bond market, may be a larger concern if there is a move toward repatriation or decreased demand for dollar-denominated assets.

bondtalk.com

Your bonds should be worth a bit more, unless a bigger inflation premium is being built in. I like Heinz suggestion. If you've got some capital gain, put in a stop loss with enough room to keep you from being stopped on noise, and hang on for a bit. Watch the future inflation guage closely.

The increase in fiscal (deficit) spending should help ease the deflationary pressures. The real key is credit contraction/debt repudiation. In the meantime, income from cash like assets is getting harder to come by. Lowering the fed rate is going to eventually move the rates paid on money market funds and MM accounts lower, and probably CDs too. That will increase the attractiveness of higher yielding treasuries, barring outlier events and a resurgance of inflation expectations.

The range of potential/probable outcomes has expanded.
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