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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: sammaster who wrote (64105)	7/7/1999 9:25:00 AM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

Samir, I think Mike can answer that question better. My view is that the more rates rise on bonds, the more likely the Fed is to raise short rates. Rising long rates suggest higher inflation expectations. Wayne

To: sammaster who wrote (64105)	7/7/1999 10:15:00 AM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Samir, Oddly enough, if the Fed did its job and raised rate another 50 basis points in a surprise, the way they did the rate cuts last year, bonds would go up. Yes, they have to raise short rates to keep the yield curve in line. Right now you have a situation where banks can borrow from the Fed and buy long term paper at a huge spread. If the Fed has any sense of history, tempting the banks to borrow short to lend long is NOT something they want to do. <g>