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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (3720)	12/21/2003 2:04:47 PM
From: eddieww	Respond to of 110194

The reason I would still avoid such a play and prefer the instruments I'm in is that I'm not really convinced the FED won't have to raise earlier than you think. If GDP 4th Q comes in at 5% there will be enormous pressure. I have a feeling that if that happens a 25 basis pt. move in March might actually lower the long end of the curve, which is mostly where I'm at. On the other hand (no one-armed economist here, LOL) I could get hammered very hard if GDP comes in hot and they still don't tighten. I do think you are probably safer with the stuff further out because I agree, with some reservation, that if the FED initiates a tightening cycle, it will be slower and of smaller magnitude than previous cycles. The FED has put themselves between a rock and a very hard place with FF rates so low for so long and still only 75% capital utilization and the unemployment problem stickier than in any previous recovery since the mid '30s. Their miscalculations and overstatements of growth provided a cushion for confidence the past couple years, but what goes around comes around, as the old saying goes.