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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Challo Jeregy who wrote (4956)	10/24/2001 12:33:57 PM
From: OX	Read Replies (1) \| Respond to of 33421

I wouldn't focus too much on the use of TIPS this go around. They typically go around and buy back various securities of varying maturities. as for stagflation, I don't think so; I think if anything we see some deflation. (bwdik) --- found this from briefing... " TIPS pass: the Fed is in buying TIPS from the market. The operation is purely technical as it adds reserves permanently to the banking system in order to reduce the growing size of the temporary daily RP operations. " also this... " With thoughts surrounding the low price of oil, growing stockpiles, and a low CRB (down 0.67 today to 182.93) bringing the lack of inflation back to the forefront of the market (and perhaps helping to support the long end, at the margin), we would note that the spread between the 10-year cash Treasury and the 10-year inflation indexed note (TIPS) has narrowed by 3 bp today, further cementing the fact that inflation is not a concern for the market. This can also be evidenced in the large outperformance on the part of the cash bond versus it's inflation adjusted counterpart. " (my bolding)