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To: Burt Masnick who wrote (98160)	2/3/2000 10:26:00 AM
From: Robert Douglas	Respond to of 186894

Burt, "But the combination of a fall to from 6.75% to 6% with a fed rise yesterday does not compute." Actually it does. The Fed has now demonstrated its resolve to fight inflation in its earliest stages. Some might say imagined inflation, but that is beside the point. Since inflation is the critical factor in the value of the long bond it only makes sense that its yield would fall. This combination (rising short rates, falling long rates) is becoming more the norm and has recently played out in Europe and the UK.

To: Burt Masnick who wrote (98160)	2/3/2000 10:28:00 AM
From: Road Walker	Read Replies (1) \| Respond to of 186894

Burt, RE: "Only possible explanation for long bond at 6% is that there is a reasonably large flight to quality." The Treasury announced yesterday that they will reduce the auctions for 1 year notes from I think 12 per year to I think 4 per year. Also that they would reduce 10 and 30 year new notes. Supply/Demand on THE worldwide place to park "safe" money, I think, is driving the bond rally. The question of where the money comes from is key, and I wish I knew the answer. Most capital in the world is "working", it's invested in stocks or bonds of some flavor. IF the rally in bonds continues, the appreciation will tempt many $'s from stocks, IMHO. Have to wait and see. John