Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Benkea who wrote (25043)	9/7/1999 5:45:00 PM
From: Follies	Read Replies (1) \| Respond to of 99985

I never understood how raising rates (and crushing older bonds issued at a lower coupon) defended the bond market. I think its kinda like hitting the accelerater when your car is skidding out of control so you can regain traction.

To: Benkea who wrote (25043)	9/7/1999 6:20:00 PM
From: Ken98	Read Replies (1) \| Respond to of 99985

Perception. Raising rates would (a) convince the bond traders that the Fed was actually serious about fighting POTENTIAL inflation rather than merely reacting to inflationary news like it is now, and (b) at a certain point have a damping effect on the economy, relieving inflationary pressures.

To: Benkea who wrote (25043)	9/8/1999 1:28:00 AM
From: Trey McAtee	Read Replies (1) \| Respond to of 99985

benkea-- its related to psychological effects. it shows the fed is serious and that the US is taking care of its problems. plus, as rates rise, they become serious competition to equities. its kind of a catch 22, because the buying should have a dampening effect on interest rates, however thats the way it works. the only thing i am worried about is buying pressure in the bonds. if this thing goes all the way the US is going to catch a VERY serious cold while the rest of the world is going to have its head put on the block. its very difficult for a creditor to extend still more credit, especially when they are being hit hard. good luck to all, trey