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Strategies & Market Trends : Tech Stock Options
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To: Lee who wrote (53764)9/30/1998 11:44:00 AM
From: ViperChick Secret Agent 006.9  Read Replies (2) of 58727
 
FYI

9.30.98

Q: What happens when a Fed ease results in a curve
flattening?

A: Over the next 5 trading days, the 2s-bonds spread
flattens another 6 basis points on average in 7 of 10
occurrences. However, from that point on, the curve
resumes its steepening trend. In fact, three weeks later,
the curve is almost 15 basis points steeper in 7 of 10
occurrences.

Interestingly enough, a 6 basis point flattening from
Tuesday's close would bring the curve back down to 60.
This would be a retest of former resistance point at 60
which, if you remember, acted as the starting point for the
flatening move we saw in the first half of the year. If
chart theory holds, then 60 will act as support and act as a
spring board for the curve to pay a visit to the 75-80 level.
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