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To: Mike M2 who wrote (52780)	7/22/1999 8:12:00 PM
From: Lymond	Read Replies (3) \| Respond to of 86076

Update from bond land: Things are looking rather ugly. High-grade spreads have skidded 10-15 bps since the beginning of the month. Swaps are now trading at the wides of last October (+95 mid market), while agencies are not far behind. Corporate spreads have gapped out 10 bps this week alone -- a very big move -- even before Easy Al tossed those few hawkish comments our way. High-quality (single-A and double-A) corporate spreads are now within 5-10 bps of last October's wides. The main difference between now and last fall is that spread markets are still functioning. Over $2 billion of new coporate securities were priced today, so it's not as if there are no buyers. The sell-off has been fairly orderly, but pricing is very elastic. Issuers need to offer fairly big concessions in order to get deals done. Stocks look extremely vulnerable to me now. The incongruity between the corporate debt and equity markets is mind-boggling -- I don't think the relative valuation differential has ever been greater than it is now. Something has got to give.