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

To: russwinter who wrote (18914)	9/23/2004 8:45:45 AM
From: jrhana	Respond to of 110194

Thanks for the Saville pieces-maybe I should subscribe. He paints our reality in a nutshell. He sure punctuates a lot of balloons full of hot air and crap purporting to be gospel that you see posted around ad infinitum and ad nauseum.

To: russwinter who wrote (18914)	9/23/2004 9:42:26 PM
From: Wyätt Gwyön	Respond to of 110194

This, in turn, has created 100s of billions of dollars of additional demand for long-term debt instruments such as T-Bonds, putting further upward pressure on bond prices and downward pressure on yields this sounds like a bit of an exaggeration to me. the entire universe of T-bonds maturing in 20yrs or later is only about $200 billion. the entire universe of USTs maturing in 5yrs or later is only $800 billion. so to say the carry trade has spurred "100s of billions of dollars of additional demand" for USTs would mean the only people buying them are hedge funds. besides, the historically low bond yields only encourages institutions with a traditional preferred habitat in bonds (e.g., insurers, pension funds, and others with long-term liabilities) to overweight equities. after all, if your next quarterly earnings report requires you to maintain the fantasy of 10% long-term returns on your pension portfolio, you sure as hell aren't going to get there with a lot of 5% T-bonds. of course, you could go back to the 70s or early 80s, when these yokels could have locked in 30yr USTs at 10% or more and thus guaranteed a 10% return with USTs alone, and instead they were assuming 6% long-term. go figure. so the low yields could actually be causing an UNDERweighting among traditional bond investors.