Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: TobagoJack who wrote (36937)	8/2/2003 8:45:23 PM
From: gumnam	Read Replies (2) of 74559

Hi Jay A word from the trenches - It is not the treasury bond yields that will cause disaster but swap spreads. Loosely speaking swap spreads is a benchmark of what a AA rated corporation should expect to pay over treasury bonds of the same maturity for borrowing money. The disturbing development in the last three days has been that the 10 year swap spreads have widened from the low 40s to high 60s, and they actually reached the level reached during the credit market crisis when ENRON, worldcom etc were failing. The markets work in steps. So the coming week will be very interesting. Yesterday there were several rumours flying around about several big hedge funds losing a lot of money in the bond markets and having to liquidate positions. This may not amount to much and maybe the powers will pull back the market from the brink. But I will be very careful out there --- Gumnam

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