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

To: MulhollandDrive who wrote (5382)	1/2/2002 4:16:43 PM
From: Hawkmoon	Respond to of 33421

So is it possible that the Bond market anticipating tightening from the FED is getting it wrong? Oh.. I don't think the bond market is getting it wrong at all. They see where the Fed had to enter into an already tight treasuries market (because debt was being reduced by the surplus), and engaging in re-purchase transactions, everyone wanted to hold bonds because they recognized they had a guaranteed buyer for as long as the Fed was injecting liquidity. But once the Fed signals that it's done, the value in holding those bonds falls drastically since they now know the Fed has to dump those treasuries back onto the market in order to sop-up excess liquidity. Thus, the bond market sells off drastically and factors in a nice, profitable buffer, forcing the Fed to sell at prices FAR BELOW what they may have just purchased those treasuries at 6 months earlier. That's how I perceive the market action. But this is "hind-sight" analysis, and I'm not nearly knowledgable enough to make such predictions in advance so that I can actually profit from them... :0) Btw, here's an excellent link you might enjoy (or might not.. :0): federalreserve.gov federalreserve.gov Hawk