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

To: Benkea who wrote (25052)	9/7/1999 7:12:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

Benkea, i agree the two are perforce related...interestingly, foreigners have been net sellers of bonds for the first time since 1977. this is the real reason for the bond market's weakness, not the perception of inflationary pressures(although that plays a role as well). i would expect however that the stock market may become an unwilling source of capital for the bond market at some point...foreigners have bought record amounts of U.S. equities this year. once a certain level in the stock/bond yield ratio is breached (i don't know what the trigger level will be) a sudden shift in asset allocations could take place, resulting in a big decline in the stock market and conversely a big rally in bonds. however, this view is conventional wisdom, i.e. that a break in stocks will automatically result in a rally in bonds...perhaps we're in for a surprise.