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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 671.91

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Nov 14 4:00 PM EST

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To: steve susko who wrote (15951)	6/4/1999 11:31:00 AM
From: GROUND ZERO™	Read Replies (2) of 99985

If rates were raised 1/4 point, then you might see some jitters in stocks, but only temporarily... the short term rate instruments may sell off some, but the long term rate will likely stay the same or improve, here's why: If the Feds raised rates, the bond market will perceive that increase as a preemptive move to stem inflation, and accurately so... this is bullish for 30 year bonds..... Now, if the reports continued to be suggestive of inflationary pressures and the Feds failed to intervene soon enough, the bonds would then sell off in anticipation of higher rates later on when the Feds then tighten 'too little too late.' An earlier tightening by the Feds would tell bond investors that their long term purchases are now being protected..... This would rally both stocks and bonds... I think the smart money secretly hopes for a small tightening earlier than a series of rate increases later.....BWDIK GZ

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