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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: patron_anejo_por_favor who wrote (141763)1/7/2002 10:02:14 AM
From: reaper  Read Replies (2) of 436258
 
Patron, I think you're wrong about the direction of rates.

EVERYBODY thinks the bond bull market is over. Barron's did a cover story declaring its demise several weeks ago. Martin Barnes (Bank Credit Analyst; very smart and thoughtful guy) has called its end. The vast consensus among hedgies, as reported by Byron Wien and Barton Biggs from their annual get together at Lyford Cay (which get together was actually held in NYC this year) has said the bond rally is over. 24 out of 24 economists in that Bloomberg story somebody linked to think that the Fed Funds rate will be 150 bps or higher (most at 250 bps or higher) by year end. Moron Kevin Hassett (co-author of Dow 36,000) thinks inflation is on the way and argues for stocks over bonds for that reason. Even Bill Gross has pretty much declared the end of the bond bull, as he is conditioning his clients to expect lower returns and also seems to be moving his portfolio to more spread product.

The bond bull is not over. Rates are going lower.

This will NOT, however, perpetuate the housing bubble, as asset prices will be deflating even as the bond bull market continues. So the re-fi boom has seen its peak despite lower rates ahead. IMHO only, of course.

Cheers
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