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Strategies & Market Trends : John Pitera's Market Laboratory

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To: Patrick Slevin who wrote (7302)	2/12/2006 6:07:19 PM
From: robert b furman	Read Replies (2) of 33421

Hi John and Patrick, Easy answer, Rates are about to go down. After all we've had fourteen 1/4 point rate increases at a measured rate. Pretty hard to say perfect when you are measuring something that has a 12 -18 month lag! The Treasury just sold 14 billion in 30 year bonds and the rate was fully inverted as they started with a yield of 4.53 an closed at 4.50. Yesterdays trading did pop back up to 4.55 on the 30. Over the long cycle I believe it is true that the fed follows the bond market and yet they've been leading it for over a year. Globalization has killed wage price inflation and product inflation. Global demand growth has pushed up commodity/resource inflation. Meanwhile the fed has just insited on pushing up rates ,albeit measured. Could it be he's set up Brnanke to ease rates as the lag gives us a noninflationary soft landing? The bond market says so - I like watching the markets better than politicians or the fed. So all those bonds might just give 4.50 coupon and a capital gains combo? Bob

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