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Pastimes : Ask Mohan about the Market

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To: Jocelyn Ally who wrote (8549)	11/19/1997 10:39:00 AM
From: studdog	Read Replies (1) of 18056

Everyone seems worried about the Japanese selling treasuries. If they do, the price will fall, yields will rise. But, it seems to me that this is an artificial and short term blip, making treasuries even more attractive as they are pretty cheap now based on the rate of inflation. They should come back down to current levels or lower if such a thing occurs. The way I understand it, the Fed raises rates to fight inflation. Inflation is nowhere to be seen, and many smart people are looking for deflation. SO, why would the Fed raise rates? In fact, it seems they are justified in lowering them, as historically, bond yields have been significantly lower with this rate of inflation. Look forward to any comments Karl

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