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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: austrieconomist who wrote (1433)10/12/2003 1:35:36 PM
From: russwinter  Read Replies (1) of 110194
 
<I cannot figure out what is motivating the Fed to drop the supply of liquidity at this time. >

Possibilities:
1. Spikes in gold and other inflation sensitive commodities.

2. Spikes in TIPS (and other bond yields).

3. Animal spirits too aggressive in junk, RE and equity markets. Note: this should be an issue for responsible CB's, but maybe not for this one?

4. Japanese are being overwhelmed now in their agreed to currency adjustment. Agreements (coordinated and controlled) have been made, now is a poor time to flood the markets with more easy dollars, with foreign CBs already forced (to prevent a sudden USD collapse) to buy $5b in US debt a week.
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