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To: Oblomov who wrote (207967)12/5/2002 12:18:03 PM
From: GraceZ  Respond to of 436258
 
Why is McCulley happy that the Fed is fighting deflation?

The man makes his living owning debt. I guess he figures an inflation reduced (within the current inflation expectations of 2%) return is preferable to an outright default.



To: Oblomov who wrote (207967)12/5/2002 12:37:56 PM
From: reaper  Read Replies (1) | Respond to of 436258
 
if there is a deflation, then the non-government debt that PIMCO owns will go to money heaven. an inflation will hurt returns (as there will be capital losses as rates move up) but at least they'll get paid.

also, i think the PIMCO guys think stocks get clocked either way, so may as well vote for the best outcome for bonds.

Cheers


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