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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (2417)	2/3/2000 9:40:00 AM
From: Paul Berliner	Read Replies (1) \| Respond to of 3536

The violent move the last two days in the 30 yr. is mostly due to the closing out of losing FOB and NOB trades. There is otherwise no way in hell the 30 yr. would get bid up so violently. News reports are saying that its because of the buyback announcements - but the 30 yr. bonds to be bought back are two decades old. The recent runs are not going to be bought back, and in fact, will be 'reopened' on occasion as per the Treasury's statement yesterday. I;m going short mortgage REITS right now - the vols are very low on their options. This situation has all the makings of a disaster for their carefully crafted portfolios. It is different from the fall of '98 only that there is still ample liquidity, however, the margin calls will come anyway.

To: Hawkmoon who wrote (2417)	2/3/2000 2:07:00 PM
From: Ahda	Read Replies (1) \| Respond to of 3536

The 30-year bond rose over three points on Thursday amid frantic buying of the heels of an announcement by the Treasury that it would drastically cut issuance of longer-maturity debt. Perhaps I am thinking to simplistically here but if you are reducing the treasuries, funds have to go somewhere and that puts them back into the stock market, via corporate bonds or stocks. What this means short term is stock bubble perpetuated. Is this thought right or wrong?

To: Hawkmoon who wrote (2417)	2/3/2000 2:38:00 PM
From: Sam	Read Replies (2) \| Respond to of 3536

Ron, Paul, all, Thanks for your comments on the startling drop in the bond yield today. Take a look at this brief Reuters article on the Dec Fed meeting. See especially the last paragraph: U.S. Fed unanimous for steady rates in December WASHINGTON, Feb 3 (Reuters) - The U.S. Federal Reserve voted unanimously in December to keep interest rates steady for fear of rattling financial markets ahead of the Year 2000 date change, though they worried the economy was growing too fast, minutes of the meeting released on Thursday said. The Federal Open Market Committee voted 10-0 on Dec. 21 for steady rates, deciding they could wait until their Feb. 1-2 meeting to deal with inflation risks. The Fed announced on Wednesday that it was boosting two key interest rates a quarter percentage point to brake the economy. ``The committee's primary near-term objective was to foster steady conditions in financial markets during the period of the century date change,' said the minutes, which are usually released shortly after the next FOMC meeting. The Fed said it saw evidence of persistent strength in the economy with relatively subdued price and wage inflation. ``The economy clearly would carry substantial expansionary momentum into the new year, quite possibly in excess of growth in the economy's long-run potential, and the key issue for the committee was whether growth in aggregate demand would slow to a more sustainable pace without further tightening,' the minutes said. The only indication of any slowing was a modest softening in housing markets. They said business activity was so strong that it was ``severely taxing' labor markets and might be constraining growth in some industries and regions of the country. [my bold; end article] My question is if the labor markets are indeed so tight that they "might be constrainging growth in some industries and regions", why can't the Fed just allow the tight labor markets to take care of the slowing?