Hi Mohan,..Re: World coming to an end, recession, etc.
I saw a message to you this morning that bonds have been pointing to a coming recession for a long time and I thought it best to point out that bonds have gotten to 4.895% (right now) because of 'flight to quality' buying and temporary parking of funds while they strip dollars from the stock market. In other words, not much to do with fundamental domestic US economic data.
If you look at the attached TYX chart, you will notice that rates started falling about the same time the SE Asian stuff started, late April '97.
chart5.bigcharts.com:80/report?r=chart&onbad=badsymbol&country=us&time=10&freq=1&compidx=aaaaa%3A0&ma=4&maval=9&uf=7168&lf=1&type=2&style=3&size=2&symb=TYX&comp=&sid=11421&sec=x&xyz=11559687&s=26882
Couldn't go back that far for substantiation, but did go back to Nov. '97. If anyone cares to go through this, it will be apparent how we got to these current rates.
economeister.com
US DEBT OPTIONS VOLATILITIES ON ROLLERCOASTER IN MIXED TRADE
economeister.com
US TSY MKT EDGES UP FROM LOWS BUT DEFENSIVE; EYES 5YR SALE
economeister.com
PORTFOLIOS: US TSY MGRS WARY OF YIELD CURVE FLATTENED BY SAFE-HAVEN BID
Even as the Asian financial crisis sustains a bid in U.S. Treasuries from global investors seeking the relative safety of dollar-denominated bonds
economeister.com
US TREASURIES ADVANCE; FOCUS ON STRONG DOLLAR-YEN, WEAK STOCKS
Traders also pointed to flight-to-quality buying in Treasuries as
Korea's election results showed the opposition leader Kim Dae Jung
winning.
economeister.com
US TREASURIES END HIGHER ON RENEWED WORRIES OVER ASIAN TROUBLES
May 6, '98
economeister.com
US TSY MKT FLAT DESPITE ASIAN BUYING ON INDONESIAN TURMOIL
Dealers reported Japanese accounts and central bank buying of
two-year notes among some buying of bills by Asian names in what was
believed to be a re-allocation of funds out of Indonesia and
neighboring countries. May 15, '98
economeister.com
US TSY MKT STRENGTHENS AS JAPAN PLACED ON CREDIT REVIEW
July 23, '98
economeister.com
US TREASURIES OUTLOOK: STOCKS, EMERGING MARKETS TO LEAD AGAIN NEXT WEEK
Treasuries traders will take their cue from other markets next week after the Russian meltdown and other plunging emerging markets powered a huge flight to quality into Treasuries in the past
week.
Aug. 28 '98
This interest rate is contrary to rising wages and increasing CPI and falling dollar and other published monthly economic measurements including consumer spending. Must be part of the reason the yield ran back up from the low of approximately 4.7% (4.68%) to current 4.895%? (Other part of the reason for run-up was dollar rebounding due to rumors that the Fed was asking around about FX exchange rates)
What more can we say? All depends on how one views the evidence.
Regards,
Lee |
