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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: BSGrinder who wrote (87805)	1/2/2001 9:39:27 PM
From: Knighty Tin	Respond to of 132070

Kit, IMHO, it may soon be time to buy calls on T-Bond rates, which is the same thing as buying puts on bonds. If the Fed lowers short term rates, that will increase inflationary pressures and make the dollar look puny. And there is no doubt that foreign buying of our Treasuries is absolutely necessary to keep our rates where they are. However, I think the current drop in rates is a bet on the economy going to hell in a handbasket, not on Fed easing. Most Nasdaq players who have any cash left are not going to buy T-Bonds. They may park it in Bills for awhile, but not bonds. It is not their cup of tea. Junk bond junkies may switch a little bit, but the main thing that will happen is that new money will avoid the junk market. And junk cos. must always get new financing to survive. That will widen the spreads even if Treasury rates go up.