Derivatives: Darth Vader's Revenge Message Board

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Non-Tech : Derivatives: Darth Vader's Revenge

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To: Henry Volquardsen who wrote (894)	4/7/1999 1:45:00 PM
From: Freedom Fighter	Read Replies (1) of 2794

Henry, >>U.S. 30-year indexed bonds seen sold at 3.89 pct...''They're tough to finance,'' another head trader said. ''No dealer desk wants to hold them.'<< A lot of investors look at the spread between the regular treasury and the indexed one to get a feel for the CPI expectations. (myself included) If there are technical trading reasons for the indexed bond to have a higher real rate than its regular treasury equivalent, then inflation expectations are actually higher than the comparison indicates. Am I understanding this correctly? If so, can you elaborate on the function of repos and the financing of bonds? Wayne

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