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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: X Y Zebra who wrote (1533)	5/14/1999 11:35:00 AM
From: Henry Volquardsen	Read Replies (2) of 3536

Would you then say that a yield of 6.00% (plus) in the 30 yr bond, becomes a more "concerning" level, or indeed a signal where a deeper sell-off for the equities.... It would become a more 'concerning' level however I have given up speculating as to what might signal a deeper sell-off in equities. If the market views a back up in bond yields as sufficient tightening to dampen inflation then we will see a mild correction. If on the other hand the market views it as a sign the Fed has gotten behind the curve on inflation then the correction could be very deep. I suspect he former will be the case but it will very much be a question of what is the market's confidence in Greenspan. I also suspect that there is more than inflation expectations in the bond yield. I suspect that the revival in some emerging markets is attracting investment flows and that bond yields need to back up to provide a more competitive return. H

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