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To: Joan Osland Graffius who wrote (104686)	5/24/2001 6:42:09 PM
From: Real Man	Read Replies (1) \| Respond to of 436258

18% on the 30-year treasuries??? You don't mean Peso-denominated bonds, do you? -ggg-

To: Joan Osland Graffius who wrote (104686)	5/24/2001 6:56:40 PM
From: Don Lloyd	Read Replies (3) \| Respond to of 436258

Joan - I am looking at the best, most likely and worst case for the long bond interest rate during this "inflation worry period". Right now my conjecture is 9% best, 12% most likely and 18% worst case. My problem is the parameter of consumer debt and its effect on this number, since I have no idea on when they will have to shut down spending which should be the point that inflation will turn. Anyone have any ideas on this attempt to guess how far the long bond can sell off. The fact that the FED is getting close to the end of the rate reduction period and the fact that there is a supply problem for the bonds would seem to indicate that the rate upside is likely limited to single digits at worst if financial markets survive. When the FED turns to tightening there will be a strong tendency for a flattening of the yield curve, also limiting long bond rate upside. JMO. Regards, Don

To: Joan Osland Graffius who wrote (104686)	5/24/2001 7:31:46 PM
From: KyrosL	Read Replies (1) \| Respond to of 436258

My view of long rates is a lot rosier than yours. My basic premise is that the long term trend is deflation. Although we are having an inflationary interlude right now, it will not be long enough to trigger a dramatic change in long rates. So my guesses are 6% best, 6.5% most likely and 7% worst case.