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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (27211)2/25/2005 12:36:11 PM
From: John Vosilla  Read Replies (2) of 110194
 
You would think with an increase in credit loss from the record lows today and less liquidity from Fannie Mae the likes of Countrywide and Washington Mutual who are aggressively marketing 6 and 12 month CD's soon to be at 3.5%+ will see their margins shrink to zero within a couple of quarters in a flat yield curve environment. If the long end backs up perhaps 125-150 basis points values will collapse and credit losses will skyrocket more than offsetting any small margins in the carry trade. There appears no way out.
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