To: Stephen who wrote (38500 ) 1/30/2000 1:29:00 PM From: pater tenebrarum Read Replies (1) | Respond to
Stephen, imo rising interest rates are generally bad for the stock market...no matter what the Fed does, the suspicion will persist that more rate hikes are on the way. the only market that may well differentiate between 1/4 or 1/2 point is the bond market. a 1/2 point increase would probably help the long bond to rally further - the bond market likes to see a vigilant Fed. a 1/4 point hike would probably be seen as too little too late by the bond market. as for stocks, we have seen the mania ignore rising rates for quite some time now, as the Fed supplied more than ample liquidity through the back door. right now, they are very carefully allowing some of the repo's of late last year to expire...clearly they are trying to let some air out of the money supply explosion without creating a panic in the stock market. so the main question for the stock market is not by how much will they raise rates, but will they continue to mop up some of the excess liquidity.
