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Pastimes : Ask Mohan about the Market

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To: Kip518 who wrote (16792)	10/18/1998 6:44:00 AM
From: John Hunt	Read Replies (2) of 18056

Fed Refloats The Markets nypostonline.com << It's one thing when mere members of the public can't refinance their mortgages to cushion the strain of layoffs. But when the government has a slightly more difficult time juggling its debt, action is called for. A good measure of the strain in the debt markets was the interest rate spread between the on the run (the most traded issue) 2-year issue and the off the run 2-year notes of almost the same maturity. By Thursday afternoon, there was a 23 basis-point, nearly a quarter of one percent, difference between the safe haven on the run issue and the nearly identical securities with maturities two months sooner. Usually the gap is 2 to 4 basis points. One basis point equals one one-hundredth of 1 percent. That didn't make sense. For all the backward-looking good economic data for the United States, the capital markets were ceasing to work. Fortunately, Greenspan spends his weekends and other free time here in New York, so he knew who to listen to. The relief rally hasn't gone very far yet - those spreads were only coming in by a few basis points by Friday, but the water level isn't rising. >> Hi Kip, Thanks for the link. John

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