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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: t2 who wrote (1148)9/30/2003 5:15:06 PM
From: russwinter  Read Replies (2) of 110194
 
<Can anyone explain why a weakening dollar sends yields LOWER?.>

You would think there could be a linkage given especially given that foreign holders of USD debt are getting clocked. The fact that the US needs to issue $3b a day to cover the twin deficits also makes it a big challenge to stay above water. Indeed, the latest Fed report (9/24) shows "foreign holdings of US debt" down 1.111b. However, Reuters reports "foreign central banks". purchased 8.8b for the week (*). So foreign, excluding CBs, sold a whopping 9.9b that week. And meanwhile the US Fed, bought 223m. They may be buying more right now? Data is released Thurs. Obviously most of this foreign CB activity is BOJ, maybe some from Beijing , as they are really under gun to try and stem a complete rout of the USD against the Yen (and yuan).

Finally I suspect that the skyrocketing OMO balance is also being used by Easy Al's buddies and cronies (favored banks and institutions) as a green light (read moral hazard) to speculate on bonds.
bullandbearwise.com
Net net there is a full scale market manipulation by CBs (and Al's cronies, certain annointed US finanical institutions) of the US treasury and agency market.

<Is there really a bond market bubble?>

There are a couple hundred posts here addressing that one. Have at it.

(*) I'd like to find a good clean internet source that reports this foreign CB activity. Anybody know where it is?
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